Posti Group improved its operating result in January–June 2017

27.07.2017

POSTI GROUP CORPORATION HALF-YEAR REPORT, JULY 27, 2017 AT 1:00 P.M. (EEST)

Posti Group Corporation Half-year Report January-June 2017

April-June

Financial highlights

  • The Group's net sales increased by 3.4% to EUR 402.3 (389.0) million.
  • The Group's adjusted EBITDA declined to EUR 19.8 (21.8) million, 4.9% (5.6%).
  • The Group's EBITDA declined to EUR 12.8 (17.0) million, 3.2% (4.4%).
  • The adjusted operating result declined to EUR 0.3 (1.9) million, or 0.1% (0.5%) of net sales.
  • The operating result declined to EUR -7.6 (-2.9) million, or -1.9% (-0.7%) of net sales.

Operational highlights

  • The number of working days was 60 (63). Easter fell in the second quarter of 2017, unlike last year, when it fell in the first quarter. The number of working days in April-June was lower than in the previous year by three days. The number of working days affects the Group's net sales and result, having an impact on both year-on-year comparison and consecutive quarter comparison
  • Measured in waybills, Posti's domestic freight grew by 4%. The combined parcel volume of Finland and the Baltic countries increased by 4%. The number of addressed letters delivered by Posti in Finland decreased by 10%.
  • Posti's structural transformation continued:
    • On April 3, 2017, Posti and Solemo Oy announced that they have signed an agreement on establishing Flexo, a joint venture that will provide in-house logistics services. The Finnish Competition and Consumer Authority approved the joint venture on April 25, 2017.
    • On May 4, 2017, OpusCapita, part of Posti Group, announced that it will sell its Finance and Accounting Outsourcing business to Longship, a Norwegian private equity investor. The transaction is estimated to be finalized in September.
    • On June 12, 2017, Posti announced the acquisition of the personal assistance business of SOL Henkilöstöpalvelut Oy.
    • On May 29, 2017, Posti announced that it is strengthening its early-morning delivery by acquiring the early-morning delivery business of Kaakon Viestintä. On June 27, 2017, Posti announced that it will merge its early-morning delivery operations into a newly established subsidiary, Posti Palvelut Oy.
    • OpusCapita, part of Posti Group, will outsource its digitizing production in Sweden, Norway and Poland to the US-based BancTec. The change is expected to enter into effect within 2017.
  • Mail items covered by the universal service obligation accounted for 4.2% (3.8%) of all of Posti's mail items.

January-June

Financial highlights

  • The Group's net sales increased by 5.3% to EUR 816.1 (775.1) million.
  • The Group's adjusted EBITDA improved to EUR 55.3 (51.6) million, 6.8% (6.7%).
  • The Group's EBITDA improved to EUR 42.9 (38.2) million, 5.3% (4.9%).
  • The adjusted operating result improved to EUR 15.8 (12.7) million, or 1.9% (1.6%) of net sales.
  • The operating result improved to EUR 2.5 (-2.3) million, or 0.3% (-0.3%) of net sales.
  • In April, in line with the decision of the Annual General Meeting held on March 27, 2017, Posti distributed a dividend of EUR 25 million on the net profit for the financial year and an extra dividend of EUR 35 million. The total dividend distribution amounted to EUR 60 million.

Operational highlights

  • The number of working days was 124 (124).
  • Measured in waybills, Posti's domestic freight grew by 8%. The combined parcel volume of Finland and the Baltic countries increased by 6%. The number of addressed letters delivered by Posti in Finland decreased by 9%.
  • As part of the Group's structural transformation, Posti acquired the home care and personal assistance service provider HR Hoiva Oy (now known as Posti Kotipalvelut Oy) in the first quarter.
  • In March, Posti began the construction of a 26,000 m2 freight terminal on Suokalliontie in Vantaa, Finland. The new terminal represents a response to the growth of the freight business.
  • Mail items covered by the universal service obligation accounted for 4.3% (4.6%) of all of Posti's mail items.

Outlook

  • Net sales in euros for the year are further expected to increase compared to the previous year. The Group's adjusted operating result is further expected to remain on par with the previous year. The operating result for 2017 will include significant special items.

Figures in brackets refer to the comparison period, i.e. the same period last year, unless otherwise stated. 

 

Heikki Malinen, President and CEO

"The ongoing trend of digitization in the business environment remains strong and reflects directly on Posti, with the Group undergoing a multi-year structural transformation as communication shifts from paper to digital and competition increases in traditional postal operations. The sharp decline in the volume of addressed letters continued, with the rate of decrease being 10% in the second quarter. However, digitization is also a source of opportunities for Posti. Posti continues to build new cornerstones for its business in growing markets according to its strategy: the areas of future growth are in parcel and logistics services, the demand for which was boosted by the favorable economic climate and growth in e-commerce in the second quarter.

Net sales increased by 3.4% in the second quarter. While letter product volumes continued to fall, the volumes of parcel and logistics products showed favorable development. Adjusted for the number of working days, parcel volume grew by 10% and freight volume by 9% in Finland. Net sales increased by 20.9% in Logistics Services and by 0.5% in Parcel Services. The increase in net sales was also significantly supported by the Group's expansion through acquisitions as well as the strenghtening of Russian ruble. Digitization and the market entry of new players have had a substantial effect on the volumes of basic services, but pricing changes have mitigated the financial impacts of declining mail volumes. We continued our determined and collective effort to ensure high quality. Growth was sought through corporate transactions in areas including in-house logistics, personal assistance services and the delivery of publications.

Posti's adjusted EBITDA in the second quarter was 4.9%. The distribution of the net sales and result between the first and second quarter was affected by Easter falling in April this year. The improved profitability of logistics services was supported by a general increase in demand as well as the improved efficiency of operations. OpusCapita's EBITDA decreased. Posti's adjusted operating result for the first half of the year improved and represented 1.9% of net sales.

Itella Russia's net sales grew by 15.9% measured in euros, but declined by 2.7% in rubles. The measures taken to improve the profitability of Itella Russia's operations are showing good results already in the half-year period and the adjustment of the cost structure will continue.

OpusCapita is moving forward with its transformation as planned. The Buyer-Supplier Ecosystem business unit continued its global growth. A transaction to divest the financial management outsourcing business is in the implementation phase. The sending of documents and invoices as well as digitizing operations in Finland will be transferred to Posti's Postal Services business group within 2017. OpusCapita's digitizing production in Sweden, Norway and Poland will be outsourced. Following these corporate transactions, OpusCapita will focus on pursuing growth in the Buyer-Supplier Ecosystem business.

The Postal Act reforms approved by the Finnish Parliament in June are an important decision for Posti. They enable the reform of delivery obligations to correspond to the accelerating digital transformation, thereby improving Posti's operating conditions in competitive markets and promoting the introduction of new business concepts and technologies. The reforms are also aimed at maintaining the cost-effective provision of universal services throughout the country in the coming years without public subsidies."

APPENDICES
Posti Group's Half-year Report in full (PDF)

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

FINANCIAL CALENDAR IN 2017
Interim Report Q3/2017: October 26, 2017, at 9:00

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

IMAGES AND LOGOS
www.posti.com/newsroom

Posti is a service provider that delivers the smartest and most customer-focused postal and logistics services in the market. Posti is expanding into new service areas and playing an increasingly significant role in the daily life of its customers. We operate in ten countries, our net sales in 2016 amounted to EUR 1,600 million and the number of our personnel is approximately 20,500. Our businesses also include the logistics service provider Itella Russia and the electronic business specialist OpusCapita. www.posti.com.