Interim Report January-March 2011: Countering reduced sales and lower earnings with business development and cost adjustments
- Net sales totaled SEK 10,032m (10,918), down 3% excluding currency changes
- Operating profit totaled SEK 420m (532), down 8% excluding structural and currency changes
- Profit before tax totaled SEK 447m (542)
- Net profit totaled SEK 344m (422)
- Return on equity, rolling 12-month, was 8 (18)%
- The equity-assets ratio was 46 (46)% at the end of the period
- Acquisition of Eek Transport AS, one of the ten largest suppliers of transport and logistics services in Norway
- The group has changed its name from Posten Norden to PostNord AB (publ)
Message from the CEO, Lars Idermark:
The continued strong Swedish economic recovery is reflected in PostNord’s volumes for and income from non-priority mail and UDM, as well as in the logistics operations in Sweden. The continued weakness of the Danish economy, combined with heavy competition, had a negative impact on Danish operations. Overall, the group’s net sales fell during the quarter due to the strong Swedish krona and the prevailing competition for mail from digital alternatives and other market players for mail in both Sweden and Denmark.
Our Danish mail operations report a significant and accelerated drop in volumes as well as reduced income, reflecting a wave of a communication digitalization on the part of government authorities and large companies in Denmark. The provisions of the new
Danish Postal Act allow Breve Danmark to use a new, more diversified price model that more closely links price to production cost, and also improves efficiency potential.
The group continued to reduce costs during the quarter, but this did not entirely compensate for the downward trend in sales. PostNord is therefore reporting a decline in operating profit for the first quarter. The operating margin fell to 4.2 percent.
With the Nordic region as its home market, PostNord will be the leading communication and logistics operator in Northern Europe. Following the successful implementation of the merger of Post Danmark A/S and Posten AB, we are now developing the group’s long-term strategy to achieve this goal.
To meet the market changes, we are focusing on business and service development. We will continue to actively develop the underlying business. PostNord will also demonstrate the power of innovation and will grow where we see opportunities to develop new, profitable business. We will involve ourselves in partnerships or make acquisitions where we see that we can strengthen our offer or our position.
The acquisition of Eek Transport that we are announcing today is a step in this direction. Through the acquisition, we are enhancing our operations in Norway as well as strengthening our position and improving our opportunities in the Norwegian logistics market.
The market trend and the group’s earnings for the first quarter of the year also illustrate the importance of continued, sweeping cost adjustments to counter the major and rapid changes and to improve profitability.