Improved operating earnings achieved through long-term cost adjustments

Message from the group CEO Lars G Nordström

Postal markets throughout the world are undergoing sharp volume contractions due to substitution and the effects of the economic downturn. This means that costs must be adjusted to the new volume levels so that profitability can be maintained and the universal service obligations can be fulfilled.

Posten Norden’s operating earnings increased 15 per cent during the first six months of 2010, due primarily to long-term efforts made in recent years to adjust capacity and costs to lower volumes and to synergy effects of the merger. Net sales, excluding structural and currency changes, fell by 2 per cent during the same period.

Measures taken on the cost side had a tangible impact on group earnings during the period. This is illustrated not least by the improvement in business area Mail Denmark’s operating earnings. The Danish market, however, shows continued sharp letter volume contractions of over 10 per cent, and an equivalent degree of cost cuts can henceforth not be expected.

In Sweden the economic recovery had a positive impact on letter volumes, but we are aware that sharp volume contractions will characterise the market going forward. Capacity adjustments in business area Mail Sweden, which had a positive impact on earnings as early as the first six months of 2009, will continue.

 Demand for business area Logistics’s services increased despite continued intense competition, and the business area reported increased earnings, excluding structural and currency changes, in the second quarter of 2010. The trend for Informationlogistics is also positive, though the business area has some way to go before it attains a positive result.

 Our efforts to create the Nordic region’s best communication and logistics company are underway. We are capitalising on the synergy effects of the merger according to plan, and we are continuously identifying new cost-saving opportunities. Posten Norden is well-equipped to meet our customers’ needs, and I am confident about the group’s continued progress.

The group was formally established on 24 June 2009 and consolidated as of 1 July 2009. Information for calendar year 2009 and quarterly data prior to July 2009 are pro forma.