The decrease in revenue (-3.2 per cent) was mainly due to the selling of subsidiaries and the decline in mail volumes. The financial results are impacted by the increasing decline in addressed mail volumes, which reached 12.9 per cent in 2018. The Group experienced organic growth of 1.7 per cent in 2018 as a result of increased sales in the logistics segment.

"We have had a lot to celebrate in 2018. Our customers have become more satisfied and the logistics market is growing. Previous customers have returned and we have won new ones. At the same time, this is a demanding market with tough competition and low margins. The mail segment is declining sharply as a result of digitalisation," says CEO Tone Wille in Posten Norge.

Logistics segment

The logistics segment increased its revenue by NOK 787 million in 2018. Adjusted operating profit was NOK 135 million, NOK 6 million higher than in 2017, showing a positive trend over the past six months. Organic growth was 5.9 per cent. E-commerce for consumers, including home delivery services, showed good growth both in and outside Norway.

"An important success factor in the future is to succeed in e-commerce with industrial production and individual delivery. The logistics network in Norway is the engine of the Norwegian logistics business. When the remaining four terminals are completed in 2020, we will realise the full effect of new production processes and transport management systems, and can exploit the economies of scale," says Wille.

At the start of the year extra resources were used to implement new parcel and freight terminals in Norway. Performance within this part of the business has shown a positive trend over the past six months, with increased productivity and improved profit.

Mail segment

In 2018, adjusted operating profit for the mail segment was NOK 657 million, representing a reduction of NOK 186 million compared with 2017. The mail segment is characterised by a dramatic decline in mail volumes and reduced profit, despite significant cost measures. The state's procurement of universal service obligations that are commercially unprofitable amounted to NOK 536 million. This was NOK 193 million higher than the previous year and was mainly due to the additional cost of maintaining five-day postal distribution throughout the country.

"It has never been more important for Posten Norge to restructure its postal operations. The mail segment is characterised by a dramatic decline in mail volumes and reduced profit. The volume decline is increasing month by month. We must continue to restructure and develop our services. A transition to fewer fixed postal delivery days requires a political decision. We expect that a proposal to amend to the Postal Act will be presented to the Storting (the Norwegian parliament) in early 2019,” says CEO Tone Wille.

Significant cost adjustments have been made to operations, including the introduction of a single addressed mail stream from 2018.

Other matters

The Group's workforce at the end of 2018 totalled 14 459 full-time equivalents (FTEs), a reduction of 1 827 FTEs compared with the end of 2017. In the mail segment the workforce was reduced by 1 898 FTEs, resulting mainly from the sale of Bring Citymail Sweden and a reduction in mail distribution and production. In the logistics segment, the workforce grew as a result of a new distribution centre in Arlanda, Stockholm.

Sickness absence for the last 12 months was 6.0 per cent, representing an increase of 0.2 percentage points compared with a year ago.

Highlights 2018 (2017)

• Revenue: MNOK 23 894 (24 678)
• Adjusted operating profit: MNOK 531 (703)
• Operating profit/loss (EBIT): MNOK 415 (692)
• Cash flow from operating activities: MNOK 598 (592)
• Return on invested capital (ROIC): 7.3 (9.8) per cent
• Return on equity (ROE): 3.9 (6.3) per cent

Highlights Q4 2018 (Q4 2017)

• Revenue: MNOK 6 407 (6 718)
• Adjusted operating profit: MNOK 246 (326)
• Operating profit/loss (EBIT): MNOK 88 (275)
• Cash flow from operating activities: MNOK 491 (628)

Source: Posten Norge