PostNord reports declining mail volumes, but strong e-commerce growth
Summarising PostNord’s January-March performance, President and CEO Håkan Ericsson has reported that “the market is characterized by continued decline in the mail business, especially in Denmark, while e-commerce is showing strong growth”. Ericsson added that the groups’ restructuring programme to phase out just under 800 administrative positions has now been concluded.
Group operating income for the quarter was SEK 312m, with net sales of SEK 10,033m.
Mail volumes declined year-on-year by 7% in the first quarter. Sweden’s volumes decline by 5%, but Denmark saw a 15% drop.
Ericsson said that the restructuring steps completed so far “are yielding results”, but warned that the continuing decline in mail volumes will mean that “continuous efficiency improvements in both production and administration are essential”.
As part of its “capital efficiency” programme, said Ericsson, PostNord will be selling a property in central Copenhagen for DKK 925 m at the end of the second quarter and staff will relocate to leased premises “near Copenhagen”.
A bright spot of the quarter was the e-commerce segment which, said Ericsson, “continues to show rapid growth”, while business to consumer (B2C) parcel volumes rose 21% year-on-year.
Ericsson also reported that PostNord signed “several substantial service logistics contracts for home delivery of food groceries, laundry and other consumer items”, as well as new parcel delivery contracts.
Ericsson’s statement included an update on regulatory changes: “Late April saw the verdict of the European Court of Justice on the case brought by the European Commission against the Swedish State for non-implementation of EU rules regarding value added tax on postal services. The verdict went in the Commission’s favour, with the result that postal services not covered by individually negotiated agreements are to be VAT-exempted. PostNord awaits changes in Swedish legislation on VAT.
“In Denmark, a planned review of the country’s postal regulation is in progress. In Sweden, a special commission on postal legislation has been announced. It is vital that changes in the postal regulations should be based on the continually changing needs of customers, primarily through digitization and the growth in e-commerce, and should therefore be governed by sustainable economic conditions.”
Ericsson wrapped up his statement by claiming that “the results from the quarter confirm that we are on the right path” – echoing the presentation which he gave at PostNord AGM on 23 April – and maintaining that “more restructuring work” will lead to “a stronger and better integrated PostNord”.
