- Itella's profitability in January-June was clearly unsatisfactory, and the result was below the target. Compared with last year, the main difference is the sharp reduction in the profitability of basic postal operations in Itella Mail Communications.
The digitalization of communication affected the delivery volumes of magazines and newspapers faster than expected. Compared with many other countries, letter volumes are still high in Finland, but the increased popularity of second class letters has considerably reduced income and profitability. On a positive note, the continuous growth of distance selling has increased the delivery volumes of parcels.
Itella Logistics still recorded a loss, despite a good increase in net sales. Particularly in Finland, net sales and profitability have developed positively. There is a considerable need for improvement of profitability in Sweden, Denmark, and Russia. In Russia, net sales have developed well, and in the Moscow area the warehouse utilization rate is back at a healthy level. The logistics market in the Moscow area is approaching a situation where demand exceeds capacity. Other parts of Russia are only just starting to recover from the financial crisis.
Itella Information is going through a strategically significant stage of development, with the focus of business increasingly shifting to offering outsourcing solutions for financial administration. Profitability was burdened by structural changes in business and a general downward trend of printed invoices.
The structural change of postal operations will require forceful cost control measures. Therefore, we must view all operations with a critical eye and also consider divesting. In order to guarantee efficient postal services throughout Finland, we must adjust the number of personnel to match customer demand.
The question of financing universal service was left open in the new Postal Services Act, to be decided on later. Even faster than expected, we are approaching the day when today's level of nationwide postal services can no longer be maintained solely with fees paid by customers. Political decisions will be necessary then: is it acceptable to adjust the service level to the income from customers, or will the postal services partly be financed with taxes?
Itella's full Interim Report
Tuija Soanjärvi, CFO, tel. +358 20 45 20907, email@example.com
NASDAQ OMX Helsinki
FINANCIAL CALENDER 2011
Interim Report for January-September on Wednesday October 26.
PHOTOGRAPHS AND LOGOS
Itella Group provides solutions for managing information and product flows. Itella operates in mail communication, information logistics and logistics in Europe and Russia. Net sales in 2010 amounted to EUR 1,842 million. The number of staff is about 28,000. Corporate services are delivered under the Itella brand, while the Posti brand is used for services targeted at consumers in Finland. More information is available online at www.itella.fi/group/english.