Itella Oyj - Company Announcement

Itella is restructuring its organization to become more customer-oriented

ITELLA CORPORATION, STOCK EXCHANGE RELEASE, AUGUST 28 2014, AT 13:00 EET

Itella will restructure its organization in Finland to improve its customer
focus and financial competitiveness. As part of the renewal, the company is
launching a two-year performance improvement program and commencing cooperation
negotiations concerning expert and supervisory positions in administration as
well as planning and supervisory duties in production. 

The organizational restructuring follows measures announced earlier this year
by Itella to adjust its operations to respond to heavily declining mail volumes
and the difficult market situation in logistics. 

- The rapid increase of digital communications and the economic recession have
had a dramatic impact on the postal and logistics industry. This has forced us
to make difficult structural decisions in order to ensure postal services to
Finnish citizens and maintain the company's profitability. By restructuring our
organization to make it clearer and more customer-focused, we will respond to
our customers' expectations, reduce administrative costs and respond to the
increasing international competition in the Finnish market, explains Heikki
Malinen, President and CEO of Itella. 

New business groups: Postal Services, Parcel and Logistics Services

To support its strategy, Itella is restructuring its organization as follows:

  -- Letter, publication and marketing services will constitute a new business
     group named Postal Services. The business group will be headed by Senior
     Vice President Jani Jolkkonen, M.Sc. (Tech.), who was previously in charge
     of Itella Logistics.
  -- Parcel, transport and warehouse logistics will constitute a new business
     group named Parcel and Logistics Services. The business group will be
     headed by Senior Vice President Jukka Rosenberg, M.Sc. (Econ.), who was
     previously in charge of Itella Mail Communications.
  -- The production operations of sorting, transporting and delivery services in
     Finland will be combined into a new Operations unit. Combining the
     production operations of Mail Communications with the domestic transport
     operations of Logistics allows the company to leverage internal synergies,
     thereby improving quality and cost-effectiveness. The unit will be headed
     by Vice President Yrjö Eskola, M.Sc. (Tech.).
  -- Jolkkonen, Rosenberg and Eskola will report to President and CEO Heikki
     Malinen.
  -- The new organizational structure will take effect on January 1, 2015.

The organizational changes do not apply to the eCommerce unit established by
Itella last year, which will continue to provide and develop e-commerce
solutions. The changes also do not apply to OpusCapita and Itella Russia, which
will both continue as separate business groups as before. 

Itella is seeking profitable growth in parcel and logistics services. In line
with its strategy, OpusCapita will focus on outsourcing and automation services
for financial management processes, with the objective of profitable organic
and acquisitive growth in the Nordic countries and Germany. In Russia, the
company has a long-term goal of profitable growth in warehouse logistics and
delivery operations. 

- In Scandinavia and the Baltic countries, the first priority is improving
profitability. We will develop our logistics services and seek growth in these
markets from parcel and freight services as well as logistics solutions for
e-commerce, Malinen says. 

Seeking growth through renewal

According to Malinen, Itella's renewal is largely directed by changes in
customer behavior. For instance, the growing popularity of e-commerce means
that customers expect Posti's network of service points to provide a wide range
of alternatives for sending and receiving parcels, as well as longer opening
hours. 

- The growth of e-commerce, the increasing re-evaluation of supply chains
brought about by the transformation of the retail industry and the growing
demand for local logistics services will provide many new positive growth
opportunities for Itella. With new operating model we are building the new
Posti as a modern service provider. We will increase the number of service
points further and bring them closer to consumers and entrepreneurs. We will
also invest in digital services, Malinen adds. 

Itella Corporation will change its company name to Posti Group Corporation as
of January 1, 2015. 

Itella to commence cooperation negotiations in Finland

As a result of organizational restructuring, Itella will commence cooperation
negotiations in Finland on September 2, 2014. The negotiations will apply to
the Itella Corporation, Itella Posti Oy, Itella Logistics Oy and Itella Real
Estate Oy organizations in Finland, and they will concern a total of 2,234
employees. 

The need for changes primarily concerns employees in expert and supervisory
positions in administration as well as planning and supervisory duties in
production. According to preliminary estimates, the reduction need is at most
319 employees. The reduction need does not concern Posti's service points or
production duties, such as postal workers employed in mail sorting or delivery
duties, drivers or the employees of service warehouses and address services. 

As a responsible employer, Itella is actively involved in supporting its
personnel in the current changing situation in the postal industry. Itella
offers dismissed employees a change security package, which includes a monetary
lump-sum in compensation and proportional to the duration of the employment
relationship, pension solutions, and the statutory procedures related to change
security. 

Itella has also launched the Uusi polku (New path) support program for its
personnel. The program will last several years and offers training and support
for job seeking, retraining, or becoming an entrepreneur. 

A new performance improvement program for 2015-2016

In spring 2013, Itella launched a two-year EUR 100 million performance
improvement program. Its targets have been achieved in full ahead of schedule,
in the third quarter of 2014. Itella will launch a new performance improvement
program for 2015-2016. The program aims to accumulate cost savings in the
amount of EUR 75 million. 



Further information:

Heikki Malinen, CEO
Sanna Ahonen, Senior Vice President, Strategy and Development
Personnel-related matters: Jaana Jokinen, Senior Vice President, Human Resources
Itella MediaDesk, tel. +358 20 452 3366