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Itella launching a EUR 100 million retrenchment program

18.08.2011

ITELLA CORPORATION STOCK EXCHANGE RELEASE AUGUST 18, 2011, AT 3 PM (CEE TIME)

· Itella is launching a retrenchment program with the aim of cutting costs by over EUR 100 million over the next three years.

· The aim is to adapt the Finnish postal system to current customer behavior and needs. Traditional postal services have had to relinquish their role as a means of communication for Finns, due to the breakthrough of electronic communication channels. Consequently, postal operations are undergoing the greatest changes ever.

· Itella's opinion is that Finns will continue to expect and need postal services similar to the current ones, alongside the Internet and other solutions. In the future, however, the services will have to be adapted to the changes in demand brought about by electronic communication. Lately, the delivery volumes of especially magazines and papers have been declining.

· The objective of the retrenchment program is to review all of the Group's business and support functions in order to secure continued financial stability. In January-June 2011, Itella recorded a business income loss of EUR 3.4 million (EBIT). At this stage, it is impossible to estimate the total effect on personnel.

· As a part of the retrenchment actions, statutory labor negotiations will be initiated next week. The negotiations concern altogether 820 persons working in three units: the Lappeenranta post center, the Posti shops and Itella Customer Relationships Marketing Ltd. Of these units, Itella Customer Relationship Marketing is not related to basic postal operations. The initial estimate for personnel cuts is 430 persons. The cuts and support measures will be carried out in good cooperation with the employee organizations, which has always been Itella's way of operating.

· Itella Posti Oy holds the license concerning the nation-wide provision of postal services (universal service obligation), including 5-day mail delivery and the network of postal outlets.

 

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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 and number of personnel to 29 000. 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.com/aboutus.