29.04.2016

POSTI GROUP CORPORATION INTERIM REPORT, APRIL 29, 2016 AT 10:00 A.M. (EET)

Posti Group Corporation Interim Report Q1/2016

 

  • The Group's net sales decreased by 10.4% and amounted to EUR 390.6 (435.9) million in January-March. Comparable net sales, excluding divested businesses, decreased by 5.5%.
  • Net sales decreased by 3.7% in Postal Services. Net sales decreased by 16.3% in Parcel and Logistics Services and comparable net sales, excluding the international freight business, by 4.9%. In OpusCapita, comparable net sales, excluding the divested Baltic businesses, decreased by -4.8%, and net sales by 9.1%. In Itella Russia, net sales decreased by 24.3%, and measured in local currency, by 12.0%.
  • The operating result before non-recurring items decreased to EUR 15.0 (20.6) million, or 3.8% (4.7%) of net sales.
  • The operating result before non-recurring items improved to EUR 24.8 (21.0) million in Postal Services and declined to EUR -5.3 (1.0) million in Parcel and Logistics Services, to EUR -2.4 (-0.9) million in Itella Russia, and to EUR 2.0 (4.7) million in OpusCapita.
  • The operating result was weighed down by non-recurring items in the amount of EUR -10.3 (0.0) million, with personnel restructuring costs representing the most significant proportion of the non-recurring items.
  • The operating result decreased to EUR 4.7 (20.5) million, or 1.2% (4.7%) of net sales.
  • Cash flow from operating activities declined to EUR 29.1 (35.2) million.
  • OpusCapita sold its businesses serving the local markets in the Baltic countries to BaltCap in January.
  • Itella Russia acquired the Russian courier company MaxiPost in March.
  • On January 26, 2016, Posti started cooperation negotiations concerning administration and basic delivery in the Operations unit, the entire Sales and Customer Services unit, and certain Group Functions. The target group of the negotiations consisted of 7,600 employees and the reduction need was at most 860 people. Posti's support program significantly reduced the number of layoffs down to 181.
  • OpusCapita revised its operating model and commenced cooperation negotiations on February 8, 2016, to reduce approximately 80 positions. The outcome of the negotiations was a reduction of approximately 70 persons.
  • Kaarina Ståhlberg, LL.M., was appointed as Posti Group's VP, Legal Affairs, and a member of the Management Board, effective from March 1, 2016.

 

 Key figures of Posti Group

1-3/
2016

1-3/
2015

1-12/
2015

Net sales, EUR million

390.6

435.9

1,650.3

Operating result (non-IFRS), EUR million*

15.0

20.6

48.7

  Operating result (non-IFRS), %*

3.8

4.7

2.9

Operating result (EBIT), EUR million

4.7

20.5

55.9

  Operating result (EBIT), %

1.2

4.7

3.4

Result before taxes, EUR million

3.5

21.3

43.3

Result for the period, EUR million

3.4

15.9

36.0

Cash flow from operating activities

29.1

35.2

81.9

  Return on equity (12 months), %

3.9

1.2

6.1

  Return on invested capital (12 months), %

4.2

3.1

6.3

  Equity ratio, %

46.5

46.6

47.8

  Gearing, %

-14.8

11.7

-10.5

Gross capital expenditure, EUR million

11.4

16.5

60.6

Average number of employees

20,577

22,579

22,219

Dividend, EUR million

 

 

18.0

 

*) Non-IFRS = excluding non-recurring items 

 

Heikki Malinen, President and CEO:

"In the first quarter, Posti actively continued its renewal and efficiency improvement measures as digitization is reducing traditional mail delivery volumes and changing customer behavior. The EUR 75 million savings target of the Group's performance improvement program 2015-2016 has now been achieved. The cost reductions partly compensated for the decrease in net sales in the first quarter. Unfortunately, it was also necessary to target personnel with cost reduction measures. The number of redundancies was, however, significantly reduced through Posti's support program.

Posti Group's operating result before non-recurring items was satisfactory in January-March, but declined to EUR 15.0 year-on-year. The positive aspect was the improved result of Postal Services in spite of lower volume. The factors affecting the business group's result in January-March included efficiency improvement measures, cost cuts and price increases, as well as Easter mailing volume falling in the first quarter. New growth has been achieved in forwarding shipments from Chinese online stores to Russia.

The upcoming reform of the Postal Act will completely deregulate the delivery of letter mail in Finland by eliminating requirements concerning postal licenses and delivery days from other operators. While we welcome competition in the delivery of letters, the relevant regulatory provisions must be fair. Under current regulations, Posti is subject to tougher delivery obligations than other operators. For this reason, it is important that the regulations pertaining to Posti's universal service obligation are eased by the reform of the Postal Act.

For the Parcel and Logistics Services business group, the first quarter included significant successes in spite of the result showing a loss due to upfront investments, intensifying competition and the challenging market situation. Posti won several major accounts in the first quarter, involving various logistics services ranging from transport to full-service supply chain solutions. The new contracts strengthen Posti's position as the largest logistics company in Finland.

In March, Posti signed a significant agreement on joining the DHL partner network, giving Posti's e-commerce customers access to a parcel delivery network covering 16 countries and 43,000 service points. At the same time, Posti will open a network of 1,200 pickup points in the Baltic countries. These concrete measures give Finnish online stores better opportunities to sell their products in the international market.

Itella Russia's net sales and operating result continued to be weighed down by the weak ruble, the economic climate in Russia and weaker demand for logistics services. The company has sought to improve profitability through significant cost cuts. While the Russian economy has contracted, the consumer e-commerce market in Russia is seeing substantial growth. In March, Itella Russia acquired the Russian courier company MaxiPost to expand its services to include parcel delivery in Russia. MaxiPost delivered more than a million parcels last year.

OpusCapita, which provides automation and software solutions for financial management, continued to invest in its new strategy as well as new e-invoicing services and cloud services, which was reflected in its result for the first quarter. In addition, the demand for paper-based products continued to decline due to digitization, and this decline in volume weighed down on the first quarter's operating result.

The business environment will remain very challenging in 2016 due to the subdued economic development in Finland. Transport volumes in heavy traffic have decreased in Finland for 47 consecutive months, starting from May 2012. We maintain our estimate, according to which comparable net sales in euros for 2016 are expected to decrease compared to 2015, and Posti's result before non-recurring items is expected to remain at the previous year's level. No quick turnaround is expected in the Russian economy and the development of the ruble exchange rate, which means that Itella Russia's business continues to involve significant uncertainty factors. Posti is in the midst of a major industry transformation. We are resolutely implementing our new strategy that will improve the Group's profitability and enable investments in future growth areas."

APPENDICES
Posti Group's Interim Report in full (PDF)
Presentation material (PDF)

FURTHER INFORMATION
Heikki Malinen, President and CEO, and Sari Helander, CFO
Tel. +358 20 452 3366 (MediaDesk)

DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.posti.com/financials

FINANCIAL CALENDAR IN 2016
Interim Report Q2/2016: July 18, 2016
Interim Report Q3/2016: October 31, 2016

IMAGES AND LOGOS
www.posti.com/newsroom