Interim Report January-September 2012: Weakened market conditions – continued conversions

July - September 2012

• Net sales totaled SEK 8,959m (9,195).
• Operating profit totaled SEK 128m (295).    
• Operating profit before restructuring costs and non-recurring items totaled SEK 232m (414).
• Net profit totaled SEK 126m (286).
• Operating margin was 1.4 (3.2) %.
• Adjusting operating margin was 2.6 (4.5) %.
• Cash flow from operating activities totaled SEK -354m (-361).

January-September 2012

• Net sales totaled SEK 28,439m (28,938).
• Operating profit totaled SEK 242m (926).
• Operating profit before restructuring costs and non-recurring items totaled SEK 1,001m (1,218).
• Net profit totaled SEK 185m (784).
• Operating margin was 0.8 (3.2) %.
• Adjusted operating margin was 3.5 (4.2) %.
• Cash flow from operating activities totaled SEK 369m (310).

Message from the CEO, Lars Idermark:

PostNord’s net sales were down 3 percent year-on-year during the third quarter of 2012. The development reflects the continued high levels of digital substitution and a weakened macroeconomic situation.

PostNord is going through a major conversion phase in 2012 and 2013, aimed at securing profitability for the mail businesses and developing the logistics business. We are making major cost reductions and investments in many areas of the business. Operating profit is therefore charged with significant restructuring costs, totaling SEK 764m to date.

Mail volumes in Denmark and Sweden were down in line with expectations. PostNord performed well in light of this trend. Due to focused efforts on streamlining and rationalizations, PostNord is showing continued profitability and a stable operating cash flow development. Excluding restructuring costs and non-recurring items, the operating margin was 2.6 percent for the quarter and 3.5 percent for the first nine months of the year.

Three of our four businesses are reporting improved operating profits this quarter. As expected, our Danish mail business is reporting lower earnings due to the continued dramatic decline in mail volumes. Changes in actuarial calculations for pensions and the comparative effect of capital gain from the sale of a real estate company in 2011, contributed negatively to this quarter’s earnings development.

Our logistics business is reporting continued growth and slightly improved profitability. The business area’s net sales also grew organically. We continue to implement our strategy to create end-to-end solutions and cross-border logistics capacity in the Nordic region. We signed another agreement this quarter for the acquisition of a complementary logistics company in Norway.

We continue to benefit from the growth of e-commerce in both the mail and logistics businesses. Volumes for B2C parcels and goods mail are growing strongly and we are seeing increased flows at our partner outlets and distribution points.

Strålfors is reporting positive operating results again this quarter, and also improved profitability quarter-on-quarter. This confirms the importance of the actions we have taken to streamline and rationalize within the business.

During the quarter, PostNord raised capital totaling SEK 2 billion through a successful bond issue. This increases our flexibility in the ongoing conversions and future acquisitions.

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 on November 7, 2012 at 08:30 A.M. CET.