Itella's net sales hit by the recession




Itella Corporation Interim Report Q2/2014 

April-June 2014


January-June 2014 


Key figures for the Itella Group          
  4-6 4-6 1-6 1-6 1-12
  2014 2013 2014 2013 2013
Net sales, EUR million 461.9 495.1 931.9 991.1 1,976.8
Operating result (non-IFRS), EUR million* 2.9 3.7 20.5 16.1 50.5
Operating result (non-IFRS), %*   0.6 0.8   2.2 1.6 2.6
Operating result (EBIT), EUR million -2.1 -10.1 2.2 0.7 9.9
Operating result (EBIT), %   -0.4 -2.0   0.2 0.1 0.5
Result before taxes, EUR million -4.1 -14.4 -2.1 -6.8 -2.4
Result for the period, EUR million -3.8 -10.9 0.2 -6.2 7.7
Return on equity (12 months), %       2.2  0.5 1.1
Return on invested capital (12 months), %       1.8 2.7 1.3
Equity ratio, %       47.3 46.5 47.5
Gearing, %       18.8 25.6 21.1
Gross capital expenditure, EUR million     30.9  27.1 61.1
Average number of employees     25,311  27,841 27,253


*) Non-IFRS = excluding non-recurring items, see Appendix 2.


Heikki Malinen, President and CEO 

"The desired turn for the better did not materialize in the Finnish economy in the first half of the year. The modest development of exports, the weakness of the retail industry and the decreased purchasing power of households kept Finland in a persistent recession. The outlook of the Finnish economy in the second half of the year is equally bleak. 

The economic recession further deepened the drastic transformation of the postal industry.The volume of heavy traffic has continued to decrease for 25 consecutive months in Finland.These factors had a direct impact on the net sales of Itella's core businesses. The demand for transport services continued to decrease, while the delivery volumes of letters and publications continued their strong decline. The growth in e-commerce, which had otherwise been strong, was also slowed down by consumers becoming more cautious in their spending. 

Additional challenges were posed by the Ukrainian crisis, which has kept the value of the ruble weak and thereby negatively affected the growth of Itella Russia's net sales. In June, economic uncertainty had a negative impact on Itella Russia's result. 

Despite the problematic business environment and difficult market situation, Itella's non-IFRS operating result for January-June improved to EUR 20.5 million. I am satisfied with the improved result in logistics, achieved in spite of the challenges posed by the weak market situation in transport and Itella being affected by labor action in June. Our performance improvement program in logistics is moving ahead systematically, and we are on the right path in implementing our new strategy. Our goal is to make our logistics business profitable.  

Positive developments during the period included the good result of OpusCapita, which specializes in automation solutions for financial management, as well as its new accounts and strong growth in cloud services. 

In January-June, delivery volumes decreased by 9% for letters, 8% for newspapers and 10% for magazines. Late in the second quarter, the volume of delivered letters fell by a record 15%.In light of such drastic decreases in volume, it is clear that we must seek new solutions for the delivery models of traditional mail to ensure profitability and competitiveness, particularly as society as a whole is simultaneously investing strongly in digitization. The unit costs of services covered by the universal service obligation are rising as the volume of postal items sent by businesses and the public sector is declining due to the growing popularity of digital communications.  

To manage these cost pressures, Itella is responding to the transformational changes in its industry by improving the efficiency of its operations and implementing adaptation measures.The current EUR 100 million performance improvement program is progressing according to plan. The Group's personnel expenses decreased by 7.1% year-on-year. As delivery volumes continue their steep decline, we must continue to implement measures to improve efficiency.We are also streamlining our operating structure and merging Itella Posti with Itella Logistics.This will clarify our corporate structure and improve the efficiency of internal processes. After the merger, Itella will appear to its customers as one company."

Itella's full Interim Report

Heikki Malinen, President and CEO, and Sari Helander, CFO

Tel. +358 20 452 3366 (MediaDesk)

NASDAQ OMX Helsinki 
Key media

Interim Report Q3/2014, November 3



Itella is your first choice for postal, logistics and e-commerce services. We manage the flow of commerce and everyday life in 11 countries. Our net sales in 2013 amounted to EUR 1,977 million. We employ approximately 26,000 professionals. We deliver corporate services under the Itella brand, while the Posti brand is used for services targeted at consumers in Finland.