Itella Oyj - Interim report (Q1 and Q3)

Itella’s net sales increased – operating result declined in a challenging market situation

ITELLA CORPORATION INTERIM REPORT, JANUARY-MARCH 2013, APRIL 29, 2013 AT 10:00
(EET) 

Itella Corporation Interim Report Q1/2013

  -- Itella Group's net sales in January-March amounted to EUR 496.0 (485.3)
     million, representing growth of 2.2 percent. The growth was generated
     particularly by the integration of VR Transpoint's groupage logistics
     business and Itella Logistics.
  -- Net sales in Itella Mail Communications decreased by 1.2 percent and
     increased by 12.9 percent in Itella Logistics. Comparable net sales in
     Itella Information grew by 5.6 percent when accounting for the sale of the
     printing services business in Germany in 2012.
  -- Operating result before non-recurring items declined to EUR 12.4 (22.8)
     million, or 2.5 percent (4.7 percent) of net sales. The operating result
     before non-recurring items declined to EUR 21.4 (25.3) million in Itella
     Mail Communications and to EUR -10.3 (-1.7) million in Itella Logistics,
     and improved to EUR 6.4 (3.2) million in Itella Information.
  -- The first-quarter operating result declined and amounted to EUR 10.8 (21.0)
     million, representing 2.2 percent (4.3 percent) of net sales. Non-recurring
     items recognized during the period totaled EUR 1.6 (1.8) million.
  -- Cash flow from operating activities increased and totaled EUR 23.4 (20.3)
     million.
  -- The rate of decline in letter and delivery volumes is accelerating and the
     overall market situation is weaker. Itella launched a new performance
     improvement program and started cooperation negotiations on April 10. The
     goal of the updated program is to achieve cost savings of EUR 100 million
     during 2013-2014.
  -- In March, Itella announced its intention to sell the entire share capital
     of Itella Bank Ltd to Savings Banks. The corporate transaction was brought
     to conclusion on April 18, 2013.
  -- Itella is also renewing its ICT operating model and, to that end, signed an
     extensive partnership agreement with IBM. As part of this agreement, Itella
     will outsource some of its ICT operations to IBM. As of June 1, 2013, a
     total of 123 employees from seven countries of operation will transfer to
     the employment of IBM.



Key figures of Itella Group                  1-3/2013  1-3/2012     2012
------------------------------------------------------------------------
Net sales, MEUR                                 496.0     485.3  1,946.7
------------------------------------------------------------------------
Operating result (Non-IFRS), MEUR  *)            12.4      22.8     53.2
------------------------------------------------------------------------
EBIT margin (Non-IFRS), % *)                      2.5       4.7      2.7
------------------------------------------------------------------------
Operating result (EBIT), MEUR                    10.8      21.0     39.0
------------------------------------------------------------------------
EBIT margin, %                                    2.2       4.3      2.0
------------------------------------------------------------------------
Result before income tax                          7.7      19.3     30.8
------------------------------------------------------------------------
Result for the financial period, MEUR             4.7      11.6     14.1
------------------------------------------------------------------------
Return on equity (12 months), %                   1.0      -1.9      2.1
------------------------------------------------------------------------
Return on invested capital (12 months), %         3.5       2.0      4.6
------------------------------------------------------------------------
Equity ratio, %                                  46.7      46.7     46.2
------------------------------------------------------------------------
Gearing, %                                       21.7      20.6     23.6
------------------------------------------------------------------------
Gross capital expenditure, MEUR                  11.0      21.7    134.7
------------------------------------------------------------------------
Personnel on average                           27,561    27,202   27,460
------------------------------------------------------------------------
Dividends, MEUR                                     -         -      6.8
------------------------------------------------------------------------
*) Non-IFRS = excluding non-recurring items                             

Return on equity and return on invested capital is disclosed in the table as a
rolling 12-month figure. 



President and CEO Heikki Malinen:

”The net sales of Itella as a whole grew during the first quarter, largely due
to VR Transpoint's groupage logistics business being integrated into Itella
Logistics. Still, the company's operating result declined to nearly half of
what is was during the corresponding period in 2012. This was attributable to
the declining letter and magazine volumes of Itella Mail Communications as well
as the logistics market, in which competition has become increasingly fierce. 

The postal sector is undergoing a transition on the global scale and there are
clear indications that digitization will have a substantial impact on volumes
during the current decade. Consumer confidence in terms of personal finances
seems to have deteriorated during early 2013. This is reflected indirectly in
freight volumes and the turnover rates in the logistics of consumables.
Competition in the logistics sector has furthermore increased. The growth in
internet sales continued, having a positive effect on Itella's business. We
continued our investment in the expansion of the network of automatic parcel
terminals. 

Itella's financial performance must be improved for the company to be able to
carry out its long-term change processes, to finance investments that are
essential in terms of its competitiveness, and to maintain the level of its
services. With these needs and the challenges of the economic environment in
mind, Itella's Board of Directors has specified the Group's long-term financial
goals. The main focus of operations is shifting from growth to the improvement
of profitability and maintenance of Group's good solvency. 

As a related measure, we started a new performance improvement program aiming
to increase efficiency in 2013 and 2014. The goal of the updated program is to
achieve cost savings in the amount of EUR 100 million. A part of this program
involves measures with which we strive to streamline our operations within, for
instance, administration and other support functions. In addition, we are in
the process of renewing our ICT operating model, in relation to which some ICT
operations are being outsourced to IBM. In March, we made the decision to sell
the entire share capital of Itella Bank Ltd to Savings Banks. This transaction
was completed recently.” 


APPENDICES
Itella's full Interim Report



FURTHER INFORMATION
President and CEO Heikki Malinen and CFO Sari Helander, tel. +358 20 452 3366
(MediaDesk) 


DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.itella.com/financials



FINANCIAL CALENDAR 2013
Interim Report Q2/2013, July 24
Interim Report Q3/2013, October 30


PHOTOGRAPHS AND LOGOS
www.itella.com/media



Itella Group provides solutions for managing information and product flows.
Itella operates in the fields of mail communications, logistics, and financial
management in Europe and Russia. Net sales in 2012 amounted to EUR 1,947
million. The number of staff is approximately 27,500. Corporate services are
delivered under the Itella brand, while the Posti brand is used for services
targeted at consumers in Finland. Further information is available online at
www.itella.com.

Attachments:

Itella_Q1-2013_Interim_Report.pdf