Posten Norge (Norway Post) has improved half-year profits as a coronavirus pandemic-driven boom in e-commerce parcels outweighed a faster drop in mail volumes, and is now pressing ahead with Nordic expansion moves.
The Nordic postal group has also completed the major transition to postal delivery every other day on 7 July, involving a workforce reduction of 1,000 FTEs on a voluntary basis and without any redundancies.
CEO Tone Wille explained: "The coronavirus pandemic led to large volume shifts in the first half of the year. There has been a marked growth in parcels from e-commerce and home delivery.
“In other areas such as goods transport to the corporate market, activity slowed sharply when the country was shut down, but during the second quarter, activity has gradually picked up again. The decline in mail volumes was exacerbated by the pandemic. It is gratifying to see that in the first half of the year we achieved both volume growth and profit growth in important areas related to e-commerce and logistics."
Posten Norge saw half-year revenues drop slightly to just under NOK 11.8 billion but adjusted operating profit improved by more than 60% to NOK 386 million, driven by higher logistics profits. In the April – June quarter, when the pandemic effects peaked, group revenues dropped 1.7% to NOK 5.83 billion but adjusted operating profits were up 77% at NOK 234 million.
Record growth in e-commerce
Posten Norge’s logistics segment, which includes the e-commerce and logistics operations, generated solid growth as lockdown measures meant many consumers turned to online shopping for everyday goods. E-commerce parcel volumes in Norway rose by 38% in the first half-year as a result but B2B volumes declined substantially as shops and businesses closed down during the lockdown.
As a result, the logistics business, which now represents about 75% of group turnover, increased half-year revenues by just 1% to NOK 8.95 billion, with flat revenues in the second quarter. But its operating profits tripled to NOK 306 million between January and June, with Q2 profits doubling to NOK 207 million, due to efficiency and productivity measures.
“The first half of the year has seen large parcel volumes at the in-store post offices, in post boxes and for home delivery. E-commerce activity and home delivery appear to be stabilising at higher levels than before the coronavirus pandemic,” the group pointed out.
In response to increased e-commerce and customers' desire for easily accessible parcel delivery solutions, Posten Norge has decided to deploy parcel boxes in a thousand different locations in Norway during 2021. By using an app, customers can pick up parcels around the clock.
Investments in Nordic expansion
Commenting on its Nordic growth strategy for parcels, home delivery and international forwarding through its Bring subsidiary, Posten Norge said: “In the first half of the year we implemented our own Nordic delivery network which now consists of 1,700 delivery locations in Sweden and 1,300 in Denmark.
“Capacity has increased in the Danish operations through the opening of a new terminal in Greve outside Copenhagen. In the autumn, a new terminal will open in Jutland near Kolding. These expansions have strengthened growth and contributed to increased profitability.”
Continued decline in mail volumes
Meanwhile, the mail business, accounting for about 25% of group turnover, suffered a 17% revenue drop in the first half-year, including an 18% fall in the second quarter, as the pandemic accelerated the long-term decline. So far this year, addressed mail has fallen by 16% and unaddressed mail by as much as 30%, the group noted. As a result, adjusted operating profits for the mail business fell by nearly 40% to NOK 142 million for the half-year.
