Itella Corporation Interim Report January–September 2012

31.10.2012

ITELLA CORPORATION INTERIM REPORT ON OCTOBER 31, 2012, AT 10:00 A.M. (EET)

July–September 2012

Itella Group’s net sales decreased slightly and totaled EUR 445.6 (EUR 449.4) million in the third quarter. Net sales increased in Itella Mail Communications and Itella Logistics, but decreased in Itella Information due to the disposal of the German printing business. Itella Information’s comparable net sales increased.
Operating result before non-recurring items improved to EUR 11.9 (10.7) million, or 2.7 percent (2.4 percent) of net sales. Performance in Itella Mail Communications improved to EUR 12.5 (7.4) million and in Itella Information to EUR 5.9 (0.1) million, respectively, while Itella Logistics saw its performance decline to EUR -2.8 (3.7) million. Since non-recurring items (EUR 32.3 million in 2011) were not recorded for the period, the third-quarter operating result clearly improved from the year before, totaling EUR 11.9 (-21.5) million, or 2.7 percent (-4.8 percent) of net sales.
On July 31, Itella Logistics Oy and VR Group signed a business purchase agreement to their previous letter of intent with which Itella Logistics acquires VR Transpoint’s groupage logistics business in Finland and the related entire share capital of PT Logistiikka Oy. The Finnish Competition Authority approved the transaction on August 23 and the deal was finalized on October 1.

January–September 2012

Itella Group’s net sales for January–September grew by 1.6 percent to EUR 1,404.1 (1,382.0) million. Net sales increased in Itella Mail Communications and Itella Logistics, while remaining unchanged in Itella Information.
Performance improved: operating result before non-recurring items totaled EUR 40.4 (7.0) million, or 2.9 percent (0.5 percent). Operating result amounted to EUR 29.9 (-25.6) million, 2.1 percent (-1.9 percent) of net sales. The operating result includes non-recurring items totaling EUR 10.5 (32.6) million. Operating result before non-recurring items grew to EUR 48.5 (17.7) million in Itella Mail Communications and to EUR 11.5 (4.0) million in Itella Information. Operating result before non-recurring items declined moderately in Itella Logistics to EUR -6.4 (-5.1) million.
Cash flow from the Group’s business clearly increased in January–September and amounted to EUR 55.8 (0.2) before capital expenditure. Return on investment (rolling 12 months) was 6 percent.

Key figures of Itella Group	7-9/2012	7-9/2011	1-9/2012	1-9/2011	2011
Net sales, MEUR	445.6	449.4	1,404.1	1,382.0	1,900.1
Operating result (non-IFRS), MEUR *)	11.9	10.7	40.4	7.0	30.5
Operating result (non-IFRS), % *)	2.7	2.4	2.9	0.5	1.6
Operating result (EBIT), MEUR	11.9	-21.5	29.9	-25.6	-5.9
Operating result (EBIT), %	2.7	-4.8	2.1	-1.9	-0.3
Result before taxes, MEUR	10.3	-24.3	23.8	-33.1	-16.4
Result for the period, MEUR	4.9	-22.9	9.1	-37.1	-30.7
Return on equity, %, 12 months			2.3	-4.4	-4.5
Return on investment, %, 12 months			6.0	-0.6	-0.2
Equity ratio, %			48.1	47.3	46.1
Gearing, %			22.3	31.0	22.1
Gross capital expenditure, MEUR	19.6	43.1	64.8	66.9	102.9
Employees on average	27,310	28,806	27,391	28,711	28,493

*) Non-IFRS = excluding non-recurring items

Jukka Alho, President and CEO:

”Itella’s business development during the current year has been mainly positive. The areas experiencing the most significant downturns comprise the traditional letter and publication businesses. Although the company’s profitability is yet to achieve targeted levels, the improvement in comparison to last year is significant. It is notable that Itella’s solvency has remained on a good, stable level also during times of economic uncertainty.

The profitability of the Information business is in the process of restoring itself, even though the non-recurring items of the German printing business disposed of during the first half of the year will be evident in year-end results.

The impact of earlier measures aiming to improve profitability is clearly evident in the Mail Communications’ business as well as in the company’s activities on the whole. This has allowed us to compensate for the volume decline in traditional postal traffic, at least in the short-term. The volumes of e-commerce have continued their positive growth and Itella's competitiveness is faring increasingly better.

Itella Logistics’ net sales are growing, despite the uncertainty in economic trends. At the end of the year, this will furthermore be impacted by the business acquired from VR. Volumes and warehouse fill rates in Russia have also developed positively – a fact that is evident in the solid increase of net sales. The year-round performance of Logistics will nevertheless lag clearly behind targets due to both the change process underway in Scandinavia and a loss occurrence in St. Petersburg.

All in all, Itella’s business has shown positive development trends throughout the year. Because of this, I want to express my gratitude to Itella’s entire personnel, who has worked very hard to achieve this success.”

APPENDICES
Itella’s full Interim Report (PDF)

FURTHER INFORMATION
Sari Helander, CFO, tel. +358 50 379 1819, firstname.lastname@itella.com

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

FINANCIAL CALENDER 2013
The financial statements for 2012 will be published on February 15, 2013.

PHOTOGRAPS AND LOGOS
www.itella.com/media

Itella Group provides solutions for managing information and product flows. Itella operates in mail communication, logistics and financial processes in Europe and Russia. In 2011, the Group reported net sales of EUR 1 900 million and employed 27,500 professionals. www.itella.com/aboutus.