Interim Report January - September 2010 Strong increase in earnings – extensive cost adjustments and synergy realisation according to plan

Message from the CEO, Lars G Nordström:

The third quarter of 2010 was marked by continued economic recovery, primarily in Sweden and Norway, though economic uncertainty prevails in many European countries, including Denmark. The market for communi­cation services is characterised by strong competition from digital alternatives, which is impacting mail volumes negatively, while the economic recovery marks the logistics market.

We are pleased with the efforts we’ve made during the first nine months of the year to adjust capacity and costs to changed market conditions. Following the merger, synergies have also been realised according to plan. The effects on the cost side have exceeded our expectations, and operating earnings improved by 33 per cent, excluding currency and structural effects. Net sales fell 2 per cent during the period.

Mail Denmark saw its revenues fall due to a continued sharp drop in volume, though extensive cost adjustments led to a distinct increase in earnings. The volume trend stabilised for Mail Sweden due to the improvement of the economy. It is important that the cost development for these business areas continues to address the problem of declining letter volumes, although costs are not expected to decline to the same extent that they have done to date. Informationlogistics was impacted by the economic uncertainty in Denmark, France and Great Britain, and cost adjustments were not sufficient to produce positive earnings, though there was a significant year-on-year improvement. The recovery in demand for logistics services, the growth of e-commerce and cost cuts had a positive effect on revenues and earnings for Logistics.

In September, the Post and Telecom Agency issued an order for Posten AB to change its pricing model in Sweden for sorted business mail by the end of the year. Our interpretation of the Postal Services Act differs from the Agency’s and we have therefore chosen to appeal the order.

The Danish government’s bill to amend the Danish Postal Act includes a provision that secures universal service obligations on a deregulated postal market in Denmark. The same bill includes an option for price differentiation, which would render production more efficient.

We are continuing our efforts to transform our operations through necessary efficiency measures and the development of new business opportunities, so that we will continue to be a competitive player on tomorrow’s communication and logistics market.