Itella Logistics reports 7.9% drop in Q3 net sales 03 November 2014

For the 9M period, net sales are down 8.5%

Itella Group's net sales in July-September decreased by 4.8% compared to the previous year to €435.1 million from €457.0 million. The decrease was due to the weakening and intense competition of the logistics market as well as currency depreciation. Mail delivery volumes continued to decline substantially. Parcel traffic increased slightly.

Net sales remained largely unchanged from the previous year in Itella Mail Communications, totaling €254.5 milion (€255.8 million), but decreased 7.9% to €145.9 million (from €158.4 million) in Itella Logistics, to €47.2 million (from €52.9 million) in Itella Russia and to €60.4 million (from €61.3 million in OpusCapita. Itella Russia's net sales decreased by 1.2% measured in rubles.

The operating result before non-recurring items decreased, amounting to €6.8 million (from €8.0 million), or 1.6% (1.7%) of net sales. The operating result before non-recurring items improved to €3.6 million (from €2.4 million) in Itella Mail Communications and was €-2.8 million (from €-2.7 million) in Itella Logistics and €2.7 million (from €3.0 million) in Itella Russia. The operating result before non-recurring items declined to €5.1 million (from €7.2 million) in OpusCapita.

The third-quarter operating result was weighed down by non-recurring items in the amount of €14.1 million (prior period: €11.1 million). The operating result was €-7.4 million (from €-3.1 million), or -1.7% (from -0.7%) of net sales.

Itella will renew its logistics services in Scandinavia and plans to give up air and sea freight as well as its service warehouses in Sweden, Norway and Denmark. In the future, Itella's focus in Scandinavia will be on road transport between its countries of operation.

Itella Corporation will change its name to Posti Group Corporation as of January 1, 2015. Itella Logistics Oy will merge with Itella Posti Oy on January 1, 2015, and Itella Posti Oy will change its name to Posti Oy (Posti Ltd).

As of January 1, 2015, the business groups will be Postal Services, Parcel and Logistics Services, Itella Russia and OpusCapita.

For the 9M period, Itella Group's net sales decreased in January-September by 5.6% to €1,367.0 million compared to the previous year. The decrease was due to the decline and intense competition of the logistics market, currency depreciation as well as lower volumes in mail delivery. At comparable exchange rates, the decline in net sales was 3.8%.

Net sales decreased by 1.6% in Itella Mail Communications, by 8.5% in Itella Logistics, by 12.5% in Itella Russia, and by 2.8% in OpusCapita. Itella Russia's net sales grew by 0.8% measured in rubles.

The operating result before non-recurring items improved and amounted to €27.3 million (from €24.1 million), or 2.0% (1.7%) of net sales. The operating result before non-recurring items improved to €-11.7 million (from €-15.6 million) in Itella Logistics and decreased to €31.6 million (from €32.8 million) in Itella Mail Communications, to €0.4 million (from €2.8 million) in Itella Russia and to €16.6 million (from €18.1 million) in OpusCapita. The operating result decreased to €-5.1 million (from €-2.4 million), or -0.4% (-0.2%) of net sales.

This year has been a time of major changes for Itella and the overall economic situation has not helped in driving growth, as the economy in Finland and neighboring regions, including Russia, has declined further. The logistics market and retail have suffered from the economic recession. Transport volumes in heavy traffic have decreased in Finland for nearly 30 consecutive months. Particularly alarming is the decrease in the delivery volumes of postal items, which continued very strongly as digital communications are becoming more common.

As the amount of traditional mail decreases, it is important for the Company to seek growth in other logistics services, such as the delivery of parcels. It has invested significantly in its service network that already consists of more than 1,400 service points. One of the fastest growing sectors for Itella is meal services, the net sales of which has grown by approximately 45.0% since 2012. Itella delivers meals to schools, day-care centres and home care meal service customers in some 80 locations.