Posti Group 2021: increased demand for parcel and logistics services drew continued growth of net sales, profitability developed positively

Posti Group Corporation Financial Statements Bulletin January–December 2021

Unless otherwise stated, the figures in brackets refer to the corresponding period in the previous year.

October–December

Financial highlights

• Net sales grew by 0.5% to EUR 444.2 (441.8) million.
• Adjusted EBITDA decreased to EUR 50.3 (60.8) million, or 11.3% (13.8%) of net sales.
• EBITDA decreased to EUR 50.1 (57.0) million, or 11.3% (12.9%) of net sales.
• Adjusted operating result decreased to EUR 18.7 (31.4) million, representing 4.2% (7.1%) of net sales.
• Operating result decreased to EUR 14.8 (27.6) million, representing 3.3% (6.2%) of net sales.

January–December

Financial highlights

• Net sales grew by 2.5% to EUR 1,595.0 (1,555.4) million.
• Adjusted EBITDA increased to EUR 181.6 (173.5) million, or 11.4% (11.2%) of net sales.
• EBITDA increased to EUR 180.5 (165.7) million, or 11.3% (10.7%) of net sales.
• Adjusted operating result decreased to EUR 59.8 (60.5) million, representing 3.7% (3.9%) of net sales.
• Operating result increased to EUR 55.0 (50.5) million, representing 3.4% (3.2%) of net sales.
• Net debt to adjusted EBITDA was 0.8x (1.3x).
• The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 32.0 million, i.e. EUR 0.8 per share, will be distributed for the financial year 2021.

Operational highlights

• In February, Posti launched its renewed strategy. According to its strategy, Posti’s goal is to become a modern delivery and fulfillment company with progressive profitability. The core of Posti’s growth is in parcels and logistics in Finland, Sweden, and the Baltics, along the entire delivery and fulfillment value chain.
• The combined external net sales of Parcel and eCommerce and logistics businesses represented 62% (59%) of the Group’s net sales.
• In January-December, total parcel volume in Finland and the Baltic countries increased by 11% (27%).
  • To answer the increasing demand, Posti develops its service network continuously. For example, the number of parcel lockers grew by 12% and the number of individual parcel locker doors by 20% during 2021.
• The number of addressed letters continued to decline and decreased by 8% (16%) in Finland.
  • The share of mail items covered by the universal service obligation accounted for 3.3% (3.4%) of all Posti’s mail items delivered.
• During the Christmas season, or the weeks from the Black Friday week till Christmas (weeks 47–51), around 7.4 million parcels were delivered and around 16 million Christmas cards and letters were sent via Posti.
• In August, the multi-year collective agreement for the mail communications and logistics industry as well as the collective agreement applicable to the parcel sorters of Posti Palvelut Oy were approved.
• In December, Posti Group completed the divestment of Itella Russia business group. The divestment of Itella Russia supports Posti’s strategy of seeking growth from its Parcel and eCommerce as well as logistics businesses in Finland, Sweden, and the Baltics. After the divestment, Posti has no operations in Russia.
• The altering market situation affected the fourth quarter profitability: Parcel volume growth leveled off to pre-pandemic levels, the general shortage of workforce, increased energy prices, and absences due to the COVID-19 virus required overtime hours and temporary workforce.

Outlook for 2022

In 2022, Posti is expecting its net sales to remain at the previous year’s level. The Group’s adjusted EBITDA in 2022 is expected to decrease from the previous year. In 2021, Posti’s net sales from continuing operations were EUR 1,595.0 million and adjusted EBITDA was EUR 181.6 million.

The potential continuing inflation and the increase in interest rates may impact consumer demand. The changes in consumer behavior affect Posti's business and could impact our actual results.

The Group’s business is characterized by seasonality. The net sales and operating result in the segments are not accrued evenly over the year. In consumer parcels and Postal Services, the first and fourth quarters are typically strong, while the second and third quarters are weaker. The postal service volume decline is expected to continue.

Key figures of Posti Group

Turkka Kuusisto, President and CEO

At the beginning of 2021, we introduced our revised strategy. Despite the challenging circumstances, the execution of our strategy has had an excellent start which is reflected in our last year’s results.

Our net sales in 2021 grew by 2.5% to EUR 1,595.0 million and the development of our profitability was strong. Our adjusted EBITDA grew by 4.7% from last year, driven by the increased net sales and operational efficiency, and it represented 11.4% of net sales. The net sales of Postal services continued to decline with the decreasing volumes, but the growing customer demand for parcel and logistics services drew the growth of our net sales. The overall logistics volumes were high as the positive market development after the logistics high season continued throughout the year.

Although we can be very pleased with the full-year result in 2021, the altering market situation was visible in the fourth quarter result. Parcel volume growth has leveled off and extremely strong growth rates similar to the ones we saw in the earlier stages of the pandemic are not in sight in the very near future. Our profitability in the fourth quarter was affected by the general shortage of workforce, increased energy prices, and absences due to the COVID-19 virus that required overtime hours and temporary workforce. Our adjusted result in the fourth quarter also included a non-recurring expense resulting from Posti’s re-assessment of calculation method related to VAT-exempt activities.

Year 2021 was important for streamlining our operations around the core of our business and future growth. The engine of the growth is the parcels and logistics services in Finland, Sweden, and the Baltics, along the entire delivery and fulfillment value chain.

In addition to seeking organic growth, we also aim to grow through acquisitions as we believe the M&A front offers us opportunities to strengthen our capabilities, and to actively participate in the rapid logistics market development. The divestment of the Itella Russia operations in December 2021 was one important step that allows us to focus on growth according to our strategy. This year started with an acquisition of the Swedish logistics company Veddestagruppen, which will be integrated into Aditro Logistics. Aditro Logistics is a forerunner of delivery and fulfillment services in Sweden, and the acquisition accelerates our transition into a stronger fulfillment player within eCommerce.

Looking ahead to this year, the overall situation poses many questions. In 2021, inflation accelerated, and we can expect this to continue to affect consumption also this year. Uncertainties related to the COVID-19 pandemic remain, and the situation can change quickly, as we have seen before. The infections are estimated to keep causing absences from work, while we already have a constant need for new employees.

With the changing circumstances, our success depends on our customer-centricity and on our ability to work together towards our joint goals at Posti. My confidence in our people and organization is strong, and I have no doubts that we are moving in the right direction.  We continue to develop our services and our vast investment program in line with our strategic focus area of delivery and fullfilment.

I would like to thank all Posti employees for their work and flexibility during the past year, which was again exceptional and demanding. I am confident that this strong performance will also continue this year. Our strategy brings us clarity and direction, and by continuing its systematic execution, we have all the ingredients for success.

Posti Group’s Financial Statement bulletin January-December 2021 in full (PDF)