Posten takes measures to address fall in revenue
Posten Norge had an operating result before non-recurring items and write-downs for Q1 of MNOK 18. Several measures have been implemented to meet the accelerating decline in mail volumes and lower revenue from logistics operations. Meanwhile the Group is growing outside Norway and in e-commerce.
Operating revenue for Q1 2016 was MNOK 6,199, which is 1.4 per cent lower than for Q1 2015. Operating result before non-recurring items and write-downs (EBITE) was MNOK 18.
Accelerating decline in letter volumes
Addressed letter volumes dropped in Q1 by 14 per cent in Norway. This is the largest ever decline in letter volume. The volume from the largest customers in banking and finance decreased by 25 per cent compared with 2015. The Mail segment had an operating result (EBITE) of MNOK 176 for Q1, which is MNOK 149 lower than for the same period last year.
"The financial results underline the importance of both implemented and planned measures. The government's proposal to combine priority and non-priority mail is an important and necessary next step to tailor the service offering to customers' changing use of Posten's services," says Dag Mejdell in Posten Norge.
The Storting (Norwegian parliament) will likely vote on the proposal to combine priority and non- priority mail before the summer, and the changes will be implemented during 2017.
In Q1 2016 the Group reduced the number of employees in staff and support functions, discontinued ordinary mail distribution on Saturdays and made changes to rural mail services. In addition, the Group is carrying out ongoing staffing adjustments.
"Posten Norge has been proactive and has made changes continuously, in line with changing customer needs. The digitisation of society means that Posten Norge is operating in a market that has changed significantly in recent years. The shortfall in oil revenues and the spill-over effects on activities in the Norwegian economy make the situation even more challenging for the Group," says Mejdell.
Demanding logistics market
The Logistics segment had a negative operating result (EBITE) of MNOK 84 for Q1 2016, which is MNOK 135 lower than for the same period in 2015. This is primarily a result of weaker market activity in Norway and a trend towards services with lower margins. In addition, falling parcel profitability and a challenging market situation in Sweden and Denmark impacted the operating result in the period. Measures have been implemented to adjust the cost level to the lower level of activity in the Logistics segment.
In a challenging market, the Group can point to positive developments in several areas:
- Private e-commerce continues to increase, growing by 4 per cent in Q1.
- Delivery quality for A class mail overnight was 87.1 per cent for Q1. which was 3.2 percentage points higher than for Q1 2015 and 2.1 percentage points above the license requirement. The remaining five license requirements were also met in Q1.
- Digipost gained over 200,000 new users in Q1 2016 and now has around 800,000 users. An increasing number of private and public enterprises send letters digitally to Norwegian residents.
- Sickness absence for the Group was 6.5 per cent for Q1 2016, a decrease of 0.4 percentage points from 2015. Sickness absence for the past 12 months was 5.9 per cent, which was 0.4 percentage points lower than for the previous 12-month period.