Message from Håkan Ericsson, President and CEO
E-commerce broke records in the run-up to Christmas, and partly as a result of this, PostNord’s B2C parcel volumes rose by 17% during the quarter. Meanwhile, the pace of digitization in Denmark remains rapid, resulting in lower mail volumes. Restructuring work continues with maintained intensity throughout the business to ensure long-term profitability and competitiveness.
Christmas e-commerce broke yet again new records. About a third of new agreements are in the e-commerce segment. During the quarter we also signed a number of new significant agreements, mainly within heavy logistics. The logistics business continued to show growth with an increase in parcel volumes totaling 8% for the quarter and 10% for the full year. The logistics market is highly competitive, which requires continued major focus on cost efficiency.
In total, mail volumes declined by 5% in the quarter, of which 9% in Denmark and 4% in Sweden. For the full year 2015 mail volumes fell by 8%, of which 16% in Denmark and 6% in Sweden. The substantially reduced mail income in Denmark is adversely affecting the result, why we are implementing a comprehensive restructuring program for the Danish business. For instance, agreements have been entered into with the Danish trade unions in order to adapt terms and conditions of employment to boost competitiveness, with estimated annual cost savings exceeding SEK 200m as of 2016.
In Q4 the Group’s adjusted operating income amounted to SEK 501m (440). The result was positively affected by implemented savings programs and healthy volumes related to Christmas shopping. The result for the quarter has been adjusted for items affecting comparability (net costs) totaling SEK 785m (510), mainly related to restructuring costs. The Group’s adjusted operating income for the full year 2015 was SEK 927m (861). The adjustment process is progressing well, and restructuring are continually being implemented to adapt the business to market development.
Current postal regulations are not fully adapted to the increased digitization in the society and the consequent substantial drop in demand for classic mail services. Work on new postal legislation is under way in Denmark, and in Sweden the government established an investigation of the Swedish postal legislation. We welcome these measures since an amendment to the regulations is required to ensure a good postal service under reasonable economic conditions throughout Denmark and Sweden.
To strengthen the increased focus on digital communication, the decision was made to integrate Strålfors more closely into the rest of the Group regarding service development and product ownership of physical and digital communication services. The organization is being adjusted by moving eCommerce to the Logistics business area, which is now called eCommerce & Logistics, and forming Communication Services from the Mail & Communication business area and Strålfors’ service development business.
During the year we have worked on building a stronger and more cohesive PostNord. We are on the right path and are gradually reinforcing our position as a leading communication and logistics operator with a Nordic end-to-end offering. An important step in this process is the launch of a joint brand that is being fully implemented in the Nordics through intensive work. Now we are delighted to be able to note that awareness of the PostNord brand has risen dramatically in the Nordics. A survey shows that in just under two years, we have increased the proportion of people who are “VERY” aware of the PostNord brand from 28% till 90% in Sweden, from 12% to 41% in Denmark and from 20% to 60% in Norway. In 2016 the introduction of our brand into Danish mail operations will be substantially accelerated.