PostNord sees 4pc drop in sales

PostNord has seen a 4% drop in its net sales for Q3 of 2016. The PostNord fall in mail volumes that brought this about was partially offset by strong growth in the B2C parcels market.

Commenting on the results, Håkan Ericsson, President and CEO of PostNord, said: “Our results are dominated by continued challenges, above all in the form of sharply falling mail volumes, but also by tough competition in the logistics market. Measures are being taken to further cut costs and to create new income streams through an attractive Nordic end-to-end offering.

“Net sales excluding acquisitions, divestments and currency effects declined by 4% in the third quarter to SEK 8,895m (9,218). The decrease was mainly due to a further sharp fall of, in all, 8% in the Group’s mail volumes, 6% in Sweden and 17% in Denmark. To a certain degree, this is being offset by the continuingly strong growth in e-commerce. Volumes of B2C parcels increased by around 20%.

“Adjusted operating income totaled SEK -41m (81) in the quarter and SEK 258m (426) for the first nine months of the year. The deterioration is attributable mainly to lower income in Denmark and Sweden as a result of the decline in mail volumes, which could not be fully offset on the cost side.”

Looking forward, Ericsson was encouraged by the signs that Danish postal regulation ~”has now been modernized to be more closely aligned to the needs of businesses and private individuals”.

Ericsson explained: “Effective July 1, economy mail is now the standard letter service in Denmark and from November Saturday deliveries will cease. In order to adapt operations on Denmark to sharply lower mail volumes, a series of robust measures are being implemented in an ongoing process. However, as income for the mail business has declined enormously over recent years, it is challenging to find ways of compensating fully on the cost side.”

The PostNord CEO said that Swedish operation has “been able to produce results that are to some extent acceptable, despite the volume losses on the mail side” – but stressed that the current review of the country’s postal sector is now “very urgent” because “having previously had to deal with volume losses of around 4% annually, we now need to adapt costs to volume decreases in the order of 6-7%”.

Ericsson warned that: “Both the current price ceiling and the model proposed by the inquiry into postal legislation restrict PostNord’s ability to operate a good postal service across the whole country under reasonable economic conditions.”

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