Interim Report January-March 2015: Securing long-term profitability and competitiveness
- Net sales totaled SEK 10,033m (9,999).
- Operating income totaled SEK 312m (106).
- Net income totaled SEK 203m (100).
- Cash flow from operating activities totaled SEK 1,140m (-469).
Message from Håkan Ericsson, President and CEO
The market is characterized by continued decline in the mail business, especially in Denmark, while e-commerce is showing strong growth. The restructuring program to phase out just under 800 administrative positions has now been concluded.
During the quarter, we signed several substantial service logistics contracts for home delivery of food groceries, laundry and other consumer items, and we also signed new parcel delivery contracts. The e-commerce segment continues to show rapid growth and B2C parcel volumes rose 21% year-on-year. In the wake of continued digitalization, mail volumes continued to decline, especially in Denmark. In total, mail volumes declined year on year by 7% in the first quarter, 15% in Denmark and 5% in Sweden.
Group operating income totaled SEK 312m (106) in the first quarter. The restructuring programs completed are yielding results, but with mail volumes continuing to decline, continuous efficiency improvements in both production and administration are essential. As part of our capital efficiency program, we have entered into an agreement to divest a property in central Copenhagen for a price of DKK 925m. The agreement will come into force at the end of the second quarter. The office will relocate to leased premises near Copenhagen.
Late April saw the verdict of the European Court of Justice on the case brought by the European Commission against the Swedish State for non-implementation of EU rules regarding value added tax on postal services. The verdict went in the Commission’s favor, with the result that postal services not covered by individually negotiated agreements are to be VAT-exempted. PostNord awaits changes in Swedish legislation on VAT.
In Denmark, a planned review of the country’s postal regulation is in progress. In Sweden, a special commission on postal legislation has been announced. It is vital that changes in the postal regulations should be based on the continually changing needs of customers, primarily through digitization and the growth in e-commerce, and should therefore be governed by sustainable economic conditions.
The results from the quarter confirm that we are on the right path, but given the continued decline in mail volumes, more restructuring work will be needed as well as continue to create the right conditions to build a stronger and better integrated PostNord. We will make sure that we deliver on our promises.
PostNord AB (publ) is required to disclose the above information under the provisions of the Securities Market Act and/or the Financial Instruments Trading Act.The information was submitted for publication at 08.30 AM CET on April 30, 2015.