Posten Norge has announced it generated Nkr23.8bn (US$2.7bn) in revenue in 2018 with an adjusted operating profit of Nkr531m (US$62m), a decrease of Nkr172m (US$20m) from 2017.
The 3.2% decrease in revenue was mainly due to the selling of subsidiaries and the decline in mail volumes. The financial results are affected by the increasing decline in addressed mail volumes, which reached 12.9% in 2018. The Group experienced organic growth of 1.7% in 2018 as a result of increased sales in the logistics segment.
“We have had a lot to celebrate in 2018. Our customers have become more satisfied and the logistics market is growing. Previous customers have returned, and we have won new ones. At the same time, this is a demanding market with tough competition and low margins. The mail segment is declining sharply as a result of digitization,” said CEO Tone Wille in Posten Norge.
The logistics segment increased its revenue by Nkr787m (US$91.6m) in 2018 with an adjusted operating profit of Nkr135m (US$15.7m), an increase of Nkr6m (US$698,000) compared to 2017. Organic growth was 5.9% and e-commerce for consumers, including home delivery services, showed good growth both in and outside Norway.
“An important success factor in the future is to succeed in e-commerce with industrial production and individual delivery. The logistics network in Norway is the engine of the Norwegian logistics business. When the remaining four terminals are completed in 2020, we will realize the full effect of new production processes and transport management systems, and can exploit the economies of scale,” said Wille.
At the start of the year extra resources were used to implement new parcel and freight terminals in Norway. Performance within this part of the business has shown a positive trend over the past six months, with increased productivity and improved profit.
In 2018, adjusted operating profit for the mail segment was Nkr657m (US$76.4m), a reduction of Nkr186m (US$21.6m) compared with 2017. The mail segment is characterized by a dramatic decline in mail volumes and reduced profit, despite significant cost measures.
The state’s procurement of universal service obligations that are commercially unprofitable amounted to Nkr536m (US$62.3m). This was Nkr193m (US$22.4m) higher than the previous year and was mainly due to the additional cost of maintaining five-day postal distribution throughout the country.
“It has never been more important for Posten Norge to restructure its postal operations. The mail segment is characterized by a dramatic decline in mail volumes and reduced profit. The volume decline is increasing month by month.
“We must continue to restructure and develop our services. A transition to fewer fixed postal delivery days requires a political decision. We expect that a proposal to amend to the Postal Act will be presented to the Storting [the Norwegian parliament] in early 2019,” Wille commented.
Significant cost adjustments have been made to operations, including the introduction of a single addressed mail stream from 2018.