Message from Håkan Ericsson, President and CEO
E-commerce displays strong growth, while mail volumes continue to fall, especially in Denmark. Implemented restructuring programs improve profit.
During the quarter PostNord signed several major contracts in the area of parcel distribution, both in B2B and B2C, as well as a significant contract with the COOP chain of cooperative association supermarkets in Denmark regarding the distribution of direct mail. About a third of the new agreements that we enter into are in the e-commerce segment, which is continuing to grow strongly, and B2C parcel volumes rose by 17% during the quarter.
During the quarter PostNord expanded its strategic cooperation with the international network DPDgroup, which is the second largest service provider in the European parcel market. The core of the expanded cooperation comprises a powerful B2C strategy, which will link PostNord’s and DPDgroup’s distribution networks, thereby creating a harmonized system with service points at 26,000 locations in Europe.
PostNord entered into an agreement to acquire the company Uudenmaan Pikakuljetus Oy (UPK) in Finland. This deal reinforces PostNord Finland’s position in logistics solutions.
In the wake of continued digitization, mail volumes continued to decline, especially in Denmark. In total, mail volumes declined by 9% in the quarter, of which 15% in Denmark and 7% in Sweden. It is vital that amendments to the postal regulations should be based on the continually changing needs of customers so that a universal postal service can be maintained in the long term under reasonable economic conditions.
In late April the Court of Justice of the European Union announced its verdict that postal services not covered by individually negotiated agreements are to be VAT-exempt. PostNord is now awaiting ongoing amendments to Swedish VAT legislation. This may entail an increase in costs for PostNord due to a reduced right to deductions for input VAT.
The Group’s adjusted operating income in Q2 totaled SEK 33m (-30). For H1 the Group’s adjusted operating income amounted to SEK 345m (76). The result is adjusted for a capital gain and an impairment loss totaling SEK 470m (0), net. The restructuring work that we have implemented is having the intended effect on the result.
Source: PostNord