Interim Report for January-June 2008: Increased Costs, Reduced Profitability

• Itella Group’s consolidated net sales for January–June totalled EUR 923.5 million, up by 8.5 per cent. The share of international operations was 29 per cent.
• Consolidated operating profit for January–June totalled EUR 43.9 million, down 33.1 per cent year-on-year. EBIT margin fell to 4.8 per cent. Profitability was especially reduced by the sharp increase in labour expenses and increased fuel costs.
• With regard to Itella Information’s early-year company acquisitions, the Polish subsidiary began operations in May, and the joint venture with Norway Post in June. 
• In April, Itella Logistics entered into an agreement concerning the acquisition of Russia’s leading provider of warehouse services, NLC (National Logistic Company). Official permissions required for the acquisition have been received, and the transaction will be concluded in August.
  

Jukka Alho, President & CEO of Itella:

"The economic downtrend did not affect the demand for Itella services in Finland, but road freight volumes in Denmark and the Baltic region turned down. Demand for logistics services remained strong in Russia. Against the European trend, letter mail delivery volumes increased by 3 per cent in Finland, while newspaper deliveries decreased by 3 per cent.

The increases in volume and prices could not compensate for the sharp increases in fuel and salary costs, leading to a reduced profit. However, the profit performance met expectations. The tight situation caused by increased costs is expected to continue during the second half."

For further information, please contact:
Tuija Soanjärvi, CFO, tel. +358 (0)20 45 20907. (e-mail format: firstname.lastname@posti.fi)www.itella.com/group/english

Appendices
Board of Directors’ Report
Consolidated Income Statement and Balance Sheet