Interim report January-September 2013: Focus on execution and capturing effects

Message from Håkan Ericsson, President and CEO

PostNord’s net sales for the third quarter were up 4 percent year-on-year as a result of acquisitions. Excluding acquisitions and currency effects, net sales were largely unchanged, a reflection of the continued dramatic decline in mail volumes and the acquired and organic growth within the Logistics business. The e-commerce market continued to grow strongly in the Nordic region.

PostNord’s operating profit improved year-on-year in the quarter due to sales growth, lower restructuring costs and the efficiency improvements and adaptations of the business that have been implemented to counter declining mail volumes in the long term. The integration of acquired businesses is essentially proceeding according to plan.

E-commerce continues its strong growth. The online trade in goods in the Nordic region grew an estimated 15-20 percent during the first half of the year, and growth was strong also during the third quarter. Large retailers are investing more in e-commerce. Furthermore, thanks to constant Internet access, consumers are increasingly opting to compare prices and make their purchases online after looking at products in physical stores. PostNord’s B2C parcel volumes were up 11 percent during the quarter.

PostNord aims to be a leading Nordic logistics operator, deliver the market’s most efficient communication solutions and be customers’ first choice in the Nordics for e-commerce deliveries and home deliveries. Our corporate strategy is focused on further strengthening our position and laying a new foundation for long-term growth and profitability. We have come a long way in this work, but we also observe that margins for the mail businesses as a whole are too low. Earnings for the Danish mail business in particular need to improve. The Logistics business continues to grow, organically as well as through acquisitions, although under low profitability. Strålfors’ profitability is too low. I see it as a priority to sharpen our focus on execution and capturing effects. We will continue to cut costs rapidly, increase the share of variable costs and employ capital more effectively.

We operate in markets that are undergoing major structural transformation. Increased digitization reduces demand for mail distribution, while at the same time increasing demand for logistics solutions for the distribution of goods. Although this is a serious challenge, PostNord is in an excellent position to capitalize on the structural transformation. We are market leader in several areas and have the Nordic region’s most extensive distribution network. We have strong brands and customer relationships, and a profound understanding of our customers’ needs and opportunities to compete using logistics and communication solutions.

PostNord has a vital role to play in the Nordic business life and society. Part of this role is providing regulated universal postal service in Sweden and Denmark. We want to continue to assure good universal postal service, and this calls for the evolution of regulatory provisions in line with market needs. In Denmark, a draft revision of postal legislation is being circulated for comment. The proposed revisions would adjust the legislation to market changes and provide relief for Post Danmark.