2014-07-18 09:08:32 CEST
2014-07-18 09:09:33 CEST
REGULATED INFORMATION
Itella Oyj - Interim report (Q1 and Q3)
ITELLA CORPORATION INTERIM REPORT, JANUARY–JUNE 2014, JULY 18, 2014 AT 10:00 (EET)
Itella's net sales hit by the recession
Itella Corporation Interim Report Q2/2014
April-June 2014
-- Itella Group's net sales in April-June decreased to EUR 461.9 (495.1)
million compared to the previous year. The decrease was due to the
weakening and the intense competition of the logistics market as well as
currency depreciation. Mail delivery volumes continued to decline
substantially.
-- Net sales decreased to EUR 275.4 (282.2) million in Itella Mail
Communications, to EUR 151.1 (167.4) million in Itella Logistics, to EUR
42.7 (50.8) million in Itella Russia, and to EUR 64.9 (66.8) million in
OpusCapita.
-- The operating result before non-recurring items decreased, amounting to EUR
2.9 (3.7) million, or 0.6% (0.8%) of net sales. The operating result before
non-recurring items decreased to EUR -7.5 (-8.7) million in Itella Mail
Communications, improved to EUR -4.1 (-4.6) million in Itella Logistics,
decreased to EUR -0.1 (2.1) million in Itella Russia, and improved to EUR
4.7 (4.5) million in OpusCapita.
-- The second-quarter operating result was weighed down by non-recurring items
in the amount of EUR 5.0 (13.9) million. The result for the period showed a
loss of EUR -3.8 (-10.9) million, or -0.8% (-2.0%) of net sales.
-- On April 29, 2014, Itella's Board of Directors approved a plan for the
merger of Itella Logistics Oy with Itella Posti Oy. The new company
structure will take effect on January 1, 2015.
-- On April 17, 2014, Itella announced the launch of a EUR 10 million
construction project related to e-commerce warehousing and dispatch
operations at the Voutila warehouse in Vantaa.
January-June 2014
-- Itella Group's net sales in January-June decreased by 6.0% to EUR 931.9
(991.1) million compared to the previous year. The decrease was due to
lower volumes in mail delivery, the decline and intense competition of the
logistics market as well as currency depreciation. At comparable exchange
rates, the decline in net sales was 4.0%.
-- Net sales decreased by 2.1% in Itella Mail Communications, by 8.8% in
Itella Logistics, by 13.3% in Itella Russia, and by 3.4% in OpusCapita.
Itella Russia's net sales grew by 1.9% measured in rubles.
-- The operating result before non-recurring items improved and amounted to
EUR 20.5 (16.1) million, or 2.2% (1.6%) of net sales.
-- The operating result before non-recurring items decreased to EUR 28.0
(30.4) million in Itella Mail Communications, improved to EUR -8.9 (-12.9)
million in Itella Logistics, decreased to EUR -2.3 (-0.2) million in Itella
Russia, and improved to EUR 11.5 (10.9) million in OpusCapita.
-- The operating result improved to EUR 2.2 (0.7) million, or 0.2% (0.1%) of
net sales. Non-recurring items recognized during the period totaled EUR
18.3 (15.5) million, of which EUR 13.1 (14.2) million was related to
personnel restructuring and EUR 5.2 (1.3) million to other items.
-- Cash flow from operating activities strengthened substantially and amounted
to EUR 43.9 (25.1) million.
-- The slowing down of economic growth and general uncertainty had a negative
impact on Itella Russia's result for January-June, particularly in the
second quarter.
-- In January, Itella started cooperation negotiations concerning basic
delivery. The negotiations were concluded in March and led to the dismissal
of 407 permanent employees.
-- Itella's business in Russia was organized into its own business group as of
the beginning of the year, and its result was reported separately for the
first time in the first quarter. From the beginning of 2014, there have
been four business groups: Itella Mail Communications, Itella Logistics,
Itella Russia and OpusCapita.
Key figures for the Itella Group
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4-6 4-6 1-6 1-6 1-12
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2014 2013 2014 2013 2013
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Net sales, EUR million 461.9 495.1 931.9 991.1 1,976.8
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Operating result (non-IFRS), EUR million* 2.9 3.7 20.5 16.1 50.5
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Operating result (non-IFRS), %* 0.6 0.8 2.2 1.6 2.6
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Operating result (EBIT), EUR million -2.1 -10.1 2.2 0.7 9.9
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Operating result (EBIT), % -0.4 -2.0 0.2 0.1 0.5
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Result before taxes, EUR million -4.1 -14.4 -2.1 -6.8 -2.4
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Result for the period, EUR million -3.8 -10.9 0.2 -6.2 7.7
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Return on equity (12 months), % 2.2 0.5 1.1
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Return on invested capital (12 months), % 1.8 2.7 1.3
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Equity ratio, % 47.3 46.5 47.5
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Gearing, % 18.8 25.6 21.1
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Gross capital expenditure, EUR million 30.9 27.1 61.1
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Average number of employees 25,311 27,841 27,253
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*) Non-IFRS = excluding non-recurring items, see Appendix 2.
Heikki Malinen, President and CEO
“The desired turn for the better did not materialize in the Finnish economy in
the first half of the year. The modest development of exports, the weakness of
the retail industry and the decreased purchasing power of households kept
Finland in a persistent recession. The outlook of the Finnish economy in the
second half of the year is equally bleak.
The economic recession further deepened the drastic transformation of the
postal industry. The volume of heavy traffic has continued to decrease for 25
consecutive months in Finland. These factors had a direct impact on the net
sales of Itella's core businesses. The demand for transport services continued
to decrease, while the delivery volumes of letters and publications continued
their strong decline. The growth in e-commerce, which had otherwise been
strong, was also slowed down by consumers becoming more cautious in their
spending.
Additional challenges were posed by the Ukrainian crisis, which has kept the
value of the ruble weak and thereby negatively affected the growth of Itella
Russia's net sales. In June, economic uncertainty had a negative impact on
Itella Russia's result.
Despite the problematic business environment and difficult market situation,
Itella's non-IFRS operating result for January-June improved to EUR 20.5
million. I am satisfied with the improved result in logistics, achieved in
spite of the challenges posed by the weak market situation in transport and
Itella being affected by labor action in June. Our performance improvement
program in logistics is moving ahead systematically, and we are on the right
path in implementing our new strategy. Our goal is to make our logistics
business profitable.
Positive developments during the period included the good result of OpusCapita,
which specializes in automation solutions for financial management, as well as
its new accounts and strong growth in cloud services.
In January-June, delivery volumes decreased by 9% for letters, 8% for
newspapers and 10% for magazines. Late in the second quarter, the volume of
delivered letters fell by a record 15%. In light of such drastic decreases in
volume, it is clear that we must seek new solutions for the delivery models of
traditional mail to ensure profitability and competitiveness, particularly as
society as a whole is simultaneously investing strongly in digitization. The
unit costs of services covered by the universal service obligation are rising
as the volume of postal items sent by businesses and the public sector is
declining due to the growing popularity of digital communications.
To manage these cost pressures, Itella is responding to the transformational
changes in its industry by improving the efficiency of its operations and
implementing adaptation measures. The current EUR 100 million performance
improvement program is progressing according to plan. The Group's personnel
expenses decreased by 7.1% year-on-year. As delivery volumes continue their
steep decline, we must continue to implement measures to improve efficiency. We
are also streamlining our operating structure and merging Itella Posti with
Itella Logistics. This will clarify our corporate structure and improve the
efficiency of internal processes. After the merger, Itella will appear to its
customers as one company.”
APPENDICES
Itella's full Interim Report
FURTHER INFORMATION
Heikki Malinen, President and CEO, and Sari Helander, CFO
Tel. +358 20 452 3366 (MediaDesk)
DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.itella.com/financials
FINANCIAL CALENDAR IN 2014
Interim Report Q3/2014, November 3
IMAGES AND LOGOS
www.itella.com/media
Itella is your first choice for postal, logistics and e-commerce services. We
manage the flow of commerce and everyday life in 11 countries. Our net sales in
2013 amounted to EUR 1,977 million. We employ approximately 26,000
professionals. We deliver corporate services under the Itella brand, while the
Posti brand is used for services targeted at consumers in Finland.
www.itella.com.
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