Posti negative Q1 results, “positive” start to year

Even though it has had a net sales decrease, the Finnish Posti Group has reported a “a positive start to the year in Postal Services”.

Group net sales for Q1 fell by 10.4% to €390.6 million. Net sales for Postal Service fell by 3.7%,  in Postal Services, while Parcel and Logistics Services saw a fall of 16.3%.

Speaking of the results and Posti’s cost-cutting programme, Heikki Malinen, the company’s President and CEO, said, “In the first quarter, Posti actively continued its renewal and efficiency improvement measures as digitization is reducing traditional mail delivery volumes and changing customer behaviour. The €75m 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 €15m 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.”

Turning his attention to prospective changes in the postal sector, Malinen said: “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.”

Malinen claimed that the Parcel and Logistics Services business group notched up some “significant successes” in Q1, despite spite showing a loss (which Malinen attributed to “upfront investments, intensifying competition and the challenging market situation”). The successes includes “major account wins” and an agreement to joint the DHL partner network.