Itella Interim Report for January–March 2011

• The Itella Group’s net sales in the first quarter totaled EUR 462.9 million (EUR 453.9 million in January–March 2010). International operations accounted for 33% (31%).
• Operating profit was EUR 1.3 million (EUR 18.3 million), representing 0.3% (4.0%) of net sales. 
• Itella Mail Communications’ net sales decreased slightly and its profitability declined significantly. A major factor was the decrease in mail delivery volumes, to which Itella’s cost structure is slow to respond. 
• Itella Information’s net sales increased and its profitability weakened. 
• Itella Logistics’ net sales increased markedly and it was able to decrease its losses. 
• The new Postal Services Act was approved by the Finnish Parliament, and it is expected to enter into force on June 1, 2011. The license concerning the universal service is held by Itella’s subsidiary Itella Posti Oy.

Jukka Alho, President and CEO:

- The long anticipated revolution in postal sector can now be seen in Itella’s financial results, as delivery volumes experienced the most significant drop seen thus far. With regard to profitability, the 11% decline in first class letters, as well as the decline in newspaper and magazine delivery volumes was significant. In Finland we are now following, with a slight delay, the development which has already occurred in many of our neighboring countries as a result of the breakthrough of e-invoicing and electronic communications.

We were not able to reduce fixed costs as required by the declining volumes. This will contribute to our price development in the near future. We have also launched a substantial cost savings program, which will help ensure a moderate price level. A clear improvement in productivity will also be necessary because of the new competitive situation created by the postal services legislation.

Under the new Postal Services Act, which will enter into force at the beginning of June, the definition of universal service products is clarified and the products are given VAT exempt status. The key principles of the universal service obligation (USO) will mainly remain unchanged. The Ministry of Transport and Communications has assigned a task force to address issues relating to the financing of the universal service.

APPENDICES
Itella’s full Interim Report (pdf)

FURTHER INFORMATION
Tuija Soanjärvi, CFO, tel. +358 20 45 20907, firstname.lastname@itella.com

DISTRIBUTION
NASDAQ OMX Helsinki
Principal media
www.itella.com/financials

FINANCIAL CALENDAR 2011
Interim Report Q2 on Wednesday, July 27
Interim Report Q3 on Wednesday, October 26

PHOTOGRAPHS AND LOGOS
www.itella.com/media

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. Itella employs approximately 28,000 personnel. 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.com/aboutus.