Posti Group Corporation: Posti's Q3/2017: Parcel and Logistics Services grew to exceed Postal Services in net sales

• The Group's net sales increased by 0.7% to EUR 378.6 (376.0) million.  

• The Group's adjusted EBITDA declined to EUR 22.4 (32.1) million, 5.9% (8.5%). 

• The Group's EBITDA declined to EUR 17.9 (39.2) million, 4.7% (10.4%). 

• The adjusted operating result declined to EUR 3.6 (11.7) million, or 1.0% (3.1%) of net sales. 

• The operating result declined and amounted to EUR -35 (18.8) million, representing -9.2% (5.0%) of net sales. In conjunction with the restructuring of OpusCapita, the Group recognized impairment of goodwill in the amount of EUR 33.9 million. 

• During the third quarter, Parcel and Logistics Services grew to exceed Postal Services in net sales. 

• The combined parcel volume of Finland and the Baltic countries increased by 11%. Measured in waybills and excluding food logistics, Posti's domestic freight grew by 8%. The number of addressed letters decreased by 13% in Finland. 

• Mail items covered by the universal service obligation accounted for 4.3% (3.9%) of all of Posti's mail items.  

• On September 14, 2017, the Helsinki Court of Appeal issued a positive ruling for Posti in a case concerning the compensation of value added taxes. 

• On September 28, 2017, Service Sector Employers Palta and the Finnish Post and Logistics Union PAU concluded negotiations on a new collective agreement for the mail communications and logistics industry that was approved by the Boards of Directors of both parties. The new collective agreement will enter into force on November 1, 2017, and remain valid until October 31, 2019. 

• The number of working days was 65 (66). The number of working days affects the Group's net sales and result, having an impact on both year-on-year comparisons and comparisons between consecutive quarters. 

• The Group's net sales grew by 3.8% to EUR 1,194.7 (1,151.0) million.  

• The Group's adjusted EBITDA declined to EUR 77.7 (83.7) million, 6.5% (7.3%). 

• The Group's EBITDA declined to EUR 60.8 (77.5) million, 5.1% (6.7%). 

• The adjusted operating result declined to EUR 19.4 (24.4) million, or 1.6% (2.1%) of net sales. 

• The operating result declined and amounted to EUR -32.5 (16.5) million, or -2.7% (1.4%) of net sales. 

• The combined parcel volume of Finland and the Baltic countries increased by 7%. Measured in waybills and excluding food logistics, Posti's domestic freight grew by 8%. The number of addressed letters decreased by 10% in Finland. 

• Posti began the construction of a 26,000 m2 freight terminal on Suokalliontie in Vantaa, Finland. The new terminal represents a response to the growth of the freight business. 

• Posti's structural transformation continued: 

• In January, Posti acquired HR Hoiva Oy (now known as Posti Kotipalvelut Oy), a provider of home care and personal assistance services to municipalities, joint municipal authorities and private customers. 

• In April, Posti and Solemo Oy (SOL) established Flexo, a joint venture that provides in-house logistics services. 

• In May, the Group's subsidiary OpusCapita announced that it will sell its Finance and Accounting Outsourcing (FAO) business to Longship AS, a Norwegian private equity investor. The transaction was finalized in September. 

• Posti acquired the personal assistance business of SOL Henkilöstöpalvelut Oy in the summer. 

• Also in the summer, Posti strengthened its early-morning delivery by acquiring the early-morning delivery operations of Kaakon Viestintä and merging Posti's early-morning delivery operations into a newly established subsidiary, Posti Palvelut Oy. 

• Mail items covered by the universal service obligation accounted for 4.2% (4.4%) of all of Posti's mail items.  

• The number of working days was 189 (190). 

• Net sales in euros for the year are further expected to increase compared to the previous year. The Group's adjusted operating result is expected to remain on par with the previous year or decrease slightly. The operating result for 2017 will include significant special items. 

• Previously the adjusted operating result was expected to remain on par with previous year. 

Heikki Malinen, President and CEO 

"E-Commerce is growing very strongly and Posti, as Finland's largest logistics company, is active in this development. 

Posti continues to undergo a multi-year structural transformation as communication shifts from paper to digital and competition increases in traditional postal operations. A clear indication of this transformation is that Parcel and Logistics Services accounted for a higher share of Posti's net sales in the third quarter than traditional postal services. The decline in the volume of addressed letters shows signs of accelerating, but e-commerce trends and the digital transformation also present opportunities for growth. 

Posti has developed a new strategy and updated its financial targets for the next three years. The postal sector is in a transformation of historic proportions, and Posti will continue its determined efforts aimed at renewal. The company has a strong focus on improving quality and the customer experience. Posti will pursue growth in e-commerce and related solutions, end-to-end logistics solutions ranging from transport to in-house logistics, new services and OpusCapita. 

At the core of the strategy are four objectives that will allow Posti to achieve renewal and emerge as a winner through this period of transformation: success in e-commerce, maintaining the importance of letters among customers, the renewal of Posti's service culture, and leveraging the digital transformation to improve Posti's services. 

The third quarter of the year was challenging for Posti. Net sales grew by nearly one percent, but the result was modest. Among the positives during the period were strong parcel growth and the high volumes of freight operations. The challenge was the steep decline in the volume of letters, which we were not able to fully compensate for in our production in the third quarter. 

The restructuring of the OpusCapita segment is moving ahead as planned. The new OpusCapita will focus on B2B customers by providing global solutions for sourcing, invoice processing, cash management and financing." 

APPENDICES 

Posti Group's Interim Report in full (PDF) 

FURTHER INFORMATION 

Heikki Malinen, President and CEO, and Sari Helander, CFO  
Tel. +358 20 452 3366 (MediaDesk) 

FINANCIAL CALENDAR IN 2018 
Financial statements for 2017: March 1, 2018, at 10:00 a.m. 

DISTRIBUTION 
NASDAQ OMX Helsinki  
Key media 
www.posti.com/talous 

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Posti is a service provider that delivers the smartest and most customer-focused postal and logistics services in the market. Posti is expanding into new service areas and playing an increasingly significant role in the daily life of its customers. We operate in 11 countries, our net sales in 2016 amounted to EUR 1,600 million and the number of our personnel is approximately 20,500. Our businesses also include the logistics service provider Itella Russia and the electronic business specialist OpusCapita. www.posti.com.