Year-end report 2019: Strong improvement in income during the year
Fourth quarter 2019*
• Net sales totaled SEK 10,267m (10,225), an organic decrease of 0.4%
• Adjusted operating income was SEK 181m (200)
• Operating income totaled SEK 35m (193)
• Net income for the period was SEK -73m (123)
• Earnings per share were SEK -0.04 (0.06)
• Cash flow from operating activities totaled SEK 1,205m (617)
Full year, January–December 2019*
• Net sales totaled SEK 38,278m (37,669), an organic increase of 0.6%
• Adjusted operating income was SEK 541m (129)
• Operating income totaled SEK 184m (-855).
• Net income for the period was SEK -239m (-1,067)
• Earnings per share were SEK -0.12 (-0.53)
• Cash flow from operating activities totaled SEK 2,132m (2,083)
*The Group applies IFRS 16 Leases as of January 1, 2019. In accordance with IFRS 16, figures for comparison have not been restated.
Comment from Annemarie Gardshol, President and Group CEO
• Strong improvement in income via ongoing work on restructuring.
• E-commerce continues to grow; B2C volumes increased by 10 percent over the full year.
• Digitalization continues; letter volumes in 2019 decreased by 8 percent in Sweden and 13 percent in Denmark.
• Delivery quality for letters exceeded requirements laid down in Sweden and Denmark.
• Improved brand image and customer satisfaction during the year.
In the fourth quarter, sales were on the same level as in the corresponding period last year and increased to SEK 38,278m (37,669) over the full year. Adjusted operating income for the quarter totaled SEK 181m (200) for the quarter and SEK 541m (129) for the full year. The improvement in income over the full year was the result, above all, of efficiency improvements and favorable growth in prices.
We are meeting the challenges of increasing digitalization and declining mail volumes via transformation of the letters business. In Denmark, where letter volumes have decreased by 75 percent over the past ten-year period, we have successfully changed our way of working in letter distribution. Since 2016, we have reduced staffing by the equivalent of around 4,000 full-time employees. In Sweden, we have been engaged for many years in adapting our organization to address the decline in volumes. In 2019, we reduced staffing in the Swedish letters business by the equivalent of just over 800 full-time employees.
E-commerce continues to drive growth in the logistics business and in the fourth quarter we delivered just over 50 million parcels. Compared with the fourth quarter 2018, B2C volumes increased by 6 percent and by 10 percent for the full year. Our strategy for providing for consumer needs and customer growth is a success. In the course of 2019, we invested approximately SEK 1.4 billion in parcel terminals, sorting machines, vehicles and digital development.
We are proud of being responsible for the universal service in mail deliveries in Sweden and Denmark and are seizing the opportunities that changes in the regulatory systems are creating for us. However, it is clear to us that further regulatory changes will be necessary if we to be able to secure an economically sustainable business. We are therefore maintaining our constructive dialogue with politicians about the letter service of the future. In Denmark, a new agreement on the universal postal services is needed. When no such agreement was possible before the end of the period in December 2019, the current agreement was extended by 6 months and PostNord Denmark will receive just over DKK 100 million for mail deliveries in the first half of 2020. In Sweden, we were given consent to implement the increase in postal rates that was effected on January 1, 2020. Work on examining a future model for alternate-day deliveries in the Swedish market is progressing.
During the quarter, we delivered just over 410 million letters. The decline in volumes was 7 percent, compared to the fourth quarter 2018. Quality for mail deliveries in Sweden was 97.6 percent for the quarter and 97.7 percent for the whole year. The corresponding figures for the standard Brevet service in Denmark were 95.1 and 95.4, respectively.
On November 1, I took up the position of Group President and CEO, while Peter Kjær Jensen took over as Vice President. The Group is in the middle of a paradigm shift, driven by changes in patterns of communication and consumption. PostNord’s future lies in the parcels business. At the same time, we are keen to ensure a good postal service for everyone in Sweden and Denmark. We now look forward to another exciting year, where change will set the tone.