Posti Group 1-3/2024: Strong profitability due to high operational excellence

Posti Group Corporation Interim Report January–March 2024

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

January-March

Financial highlights

• Net sales decreased by 3.9% to EUR 382.1 (397.6) million.
• Adjusted EBITDA increased to EUR 53.0 (42.5) million, or 13.9% (10.7%) of net sales.
• EBITDA increased to EUR 49.9 (41.6) million, or 13.1% (10.5%) of net sales.
• Adjusted operating result increased to EUR 21.2 (9.6) million, representing 5.5% (2.4%) of net sales.
• Operating result increased to EUR 18.1 (8.8) million, representing 4.7% (2.2%) of net sales.
• Net debt to adjusted EBITDA was 1.2x (1.2x).

Operational highlights in Q1

• Group net sales decreased which was affected by the low consumer and customer demand in all segments. Political strikes in Finland had an indirect negative impact on net sales.
• The Group’s adjusted EBITDA and operating result improved significantly. Continuous improvements in cost and operational efficiency, especially in the Postal Services increased the share of the Group’s adjusted EBITDA of net sales to a record high.
• In the eCommerce and Delivery Services segment, the total parcel volume grew by 5% (decreased by 1%) driven by the growth in the Baltic countries.
• Weak customer demand and political strikes in Finland impacted warehousing consequently declining Fulfillment and Logistics Services net sales and profitability.
• The addressed letter volumes continued to decrease by 16% (0%).
  • The share of mail items covered by the universal service obligation accounted for 3.2% (2.8%) of all Posti’s mail items delivered.

Outlook for 2024 unchanged

In 2024, Posti is expecting its net sales and adjusted EBITDA to be on the previous year’s level. In 2023, Posti’s net sales from continuing operations were EUR 1,586.1 million and adjusted EBITDA was EUR 197.7 million.

Current macroeconomic and market conditions bring uncertainty to economic projection and consumer confidence. Consumer behavior affects Posti's business and may further impact our actual results.

The Group’s business is characterized by seasonality. The net sales and adjusted EBITDA 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 volume decline is expected to continue.

Timo Karppinen, Interim CEO

We started the year with strong profitability which is a result of delivering great operational excellence and resilient cost discipline. We continued to implement our strategy and stayed on the course towards our vision of becoming a modern fulfillment and delivery company with progressive profitability. The good work from last year continued in the first quarter yielding a great result, even in the challenging market.   

Our net sales declined by 3.9% to EUR 382.1 (397.6) million. Consumer spending remained weak during the first quarter, which resulted in declined volumes and low circulation of goods in warehouses. We also faced some negative effects off the political strikes in Finland during the first quarter. The Group’s adjusted EBITDA increased to EUR 53.0 (42.5) million, which is highest in the recent years. Growth was remarkable taking into consideration the relatively weak Q1 2023. Improved cost and operational efficiency across all segments had a positive impact on the entire Group’s result. This is a strong accomplishment. 

On the segment level, the eCommerce and Delivery Services profitability increased due to improvements in operational efficiency, while the net sales declined. On a positive note, we saw some increase in the consumer market’s parcel volumes, particularly in the Baltics. The slow market, especially in the construction industry, and the political strikes in Finland affected the volumes in warehouses negatively, consequently decreasing the net sales and profitability in the Fulfillment and Logistics Services segment. The Postal Services segment achieved a significant improvement in profitability. This was due to improved operational efficiency, especially in automated sorting. The segment’s net sales declined.

Although the high inflation and interest rates have slightly declined, the consumer purchasing power and trust in personal economy remains below the long-term average. Having said this, we do believe that the long-term market potential of e-commerce will remain positive in the Nordics, and we continue to seek growth in line with our strategy.

Sustainability continues to be at the core of our strategy. In the first quarter we updated our sustainability program for the next three years. With the new program we keep on focusing on our people, and we want to help them grow. We will drive the clean transition of logistics by eliminating our own emissions and transport fossil-free by 2030 and be at net zero by 2040. We strive to create a positive impact on society by for example advancing human rights, ethical business, and promoting anti-racism. I’m also satisfied that in February we took another concrete step forward in our climate work as our first ever diesel to electric conversion truck started to operate in Finland.

Thank you Posti team, for your decisive work on achieving this as the market environment and consumer confidence continued to be weak. Looking ahead, while market uncertainty impacted our net sales in the first quarter, we proceed with ensuring efficiency in everything we do.

Posti Group Corporation Interim Report January-March 2024 in full (PDF)