Posti Group Corporation - Interim report (Q1 and Q3)

Posti Group Corporation: Posti's Q3/2017: Parcel and Logistics Services grew to exceed Postal Services in net sales

POSTI GROUP CORPORATION INTERIM REPORT, OCTOBER 26, 2017 AT 9:00 A.M. (EET)

Posti Group Corporation Interim Report Q3/2017

July-September

Financial highlights

  * The Group's net sales increased by 0.7% to EUR 378.6 (376.0) million.
  * The Group's adjusted EBITDA declined to EUR 22.4 (32.1) million, 5.9%
    (8.5%).
  * The Group's EBITDA declined to EUR 17.9 (39.2) million, 4.7% (10.4%).
  * The adjusted operating result declined to EUR 3.6 (11.7) million, or 1.0%
    (3.1%) of net sales.
  * The operating result declined and amounted to EUR -35 (18.8) million,
    representing -9.2% (5.0%) of net sales. In conjunction with the
    restructuring of OpusCapita, the Group recognized impairment of goodwill in
    the amount of EUR 33.9 million.

Operational highlights

  * During the third quarter, Parcel and Logistics Services grew to exceed
    Postal Services in net sales.
  * The combined parcel volume of Finland and the Baltic countries increased by
    11%. Measured in waybills and excluding food logistics, Posti's domestic
    freight grew by 8%. The number of addressed letters decreased by 13% in
    Finland.
  * Mail items covered by the universal service obligation accounted for 4.3%
    (3.9%) of all of Posti's mail items.
  * On September 14, 2017, the Helsinki Court of Appeal issued a positive ruling
    for Posti in a case concerning the compensation of value added taxes.
  * On September 28, 2017, Service Sector Employers Palta and the Finnish Post
    and Logistics Union PAU concluded negotiations on a new collective agreement
    for the mail communications and logistics industry that was approved by the
    Boards of Directors of both parties. The new collective agreement will enter
    into force on November 1, 2017, and remain valid until October 31, 2019.
  * The number of working days was 65 (66). The number of working days affects
    the Group's net sales and result, having an impact on both year-on-year
    comparisons and comparisons between consecutive quarters.

January-September

Financial highlights

  * The Group's net sales grew by 3.8% to EUR 1,194.7 (1,151.0) million.
  * The Group's adjusted EBITDA declined to EUR 77.7 (83.7) million, 6.5%
    (7.3%).

  * The Group's EBITDA declined to EUR 60.8 (77.5) million, 5.1% (6.7%).
  * The adjusted operating result declined to EUR 19.4 (24.4) million, or 1.6%
    (2.1%) of net sales.
  * The operating result declined and amounted to EUR -32.5 (16.5) million, or
    -2.7% (1.4%) of net sales.

Operational highlights

  * The combined parcel volume of Finland and the Baltic countries increased by
    7%. Measured in waybills and excluding food logistics, Posti's domestic
    freight grew by 8%. The number of addressed letters decreased by 10% in
    Finland.
  * Posti began the construction of a 26,000 m2 freight terminal on
    Suokalliontie in Vantaa, Finland. The new terminal represents a response to
    the growth of the freight business.
  * Posti's structural transformation continued:

  * In January, Posti acquired HR Hoiva Oy (now known as Posti Kotipalvelut Oy),
    a provider of home care and personal assistance services to municipalities,
    joint municipal authorities and private customers.
  * In April, Posti and Solemo Oy (SOL) established Flexo, a joint venture that
    provides in-house logistics services.
  * In May, the Group's subsidiary OpusCapita announced that it will sell its
    Finance and Accounting Outsourcing (FAO) business to Longship AS, a
    Norwegian private equity investor. The transaction was finalized in
    September.
  * Posti acquired the personal assistance business of SOL Henkilöstöpalvelut Oy
    in the summer.
  * Also in the summer, Posti strengthened its early-morning delivery by
    acquiring the early-morning delivery operations of Kaakon Viestintä and
    merging Posti's early-morning delivery operations into a newly established
    subsidiary, Posti Palvelut Oy.

  * Mail items covered by the universal service obligation accounted for 4.2%
    (4.4%) of all of Posti's mail items.
  * The number of working days was 189 (190).

Outlook

  * Net sales in euros for the year are further expected to increase compared to
    the previous year. The Group's adjusted operating result is expected to
    remain on par with the previous year or decrease slightly. The operating
    result for 2017 will include significant special items.
  * Previously the adjusted operating result was expected to remain on par with
    previous year.


Figures in brackets refer to the comparison period, i.e. the same period last
year, unless otherwise stated.

 Key figures of Posti Group

                             7-9 2017  7-9 2016  1-9 2017  1-9 2016  1-12 2016

 Net sales, EUR million         378.6     376.0   1,194.7   1,151.0    1,607.6

 Adjusted EBITDA, EUR            22.4      32.1      77.7      83.7      126.7
 million

 Adjusted EBITDA, %               5.9       8.5       6.5       7.3        7.9

 EBITDA, EUR million             17.9      39.2      60.8      77.5      116.0

 EBITDA, %                        4.7      10.4       5.1       6.7        7.2

 Adjusted operating result,       3.6      11.7      19.4      24.4       47.1
 EUR million

 Adjusted operating result,       1.0       3.1       1.6       2.1        2.9
 %

 Operating result, EUR          -35.0      18.8     -32.5      16.5       30.7
 million

 Operating result, %             -9.2       5.0      -2.7       1.4        1.9

 Result before taxes, EUR       -36.7      16.8     -39.3      14.8       29.5
 million

 Result for the period, EUR     -35.1      13.6     -42.2      12.8       23.2
 million

 Cash flow from operating                            44.8       9.0       63.1
 activities

 Return on equity (12                                -5.8       2.7        3.9
 months), %

 Return on invested capital                          -2.2       3.7        5.1
 (12 months), %

 Equity ratio, %                                     48.0      48.4       54.9

 Gearing, %                                          -2.9      -7.9      -13.6

 Gross capital expenditure,      16.6      17.3      52.9      77.0      100.4
 EUR million

 Employees on average                              20,479    20,759     20,632

 Employees on average, FTE                         18,280    18,620     18,529

 Dividends, EUR million                                                   60.0







Heikki Malinen, President and CEO

"E-Commerce is growing very strongly and Posti, as Finland's largest logistics
company, is active in this development.

Posti continues to undergo a multi-year structural transformation as
communication shifts from paper to digital and competition increases in
traditional postal operations. A clear indication of this transformation is that
Parcel and Logistics Services accounted for a higher share of Posti's net sales
in the third quarter than traditional postal services. The decline in the volume
of addressed letters shows signs of accelerating, but e-commerce trends and the
digital transformation also present opportunities for growth.

Posti has developed a new strategy and updated its financial targets for the
next three years. The postal sector is in a transformation of historic
proportions, and Posti will continue its determined efforts aimed at renewal.
The company has a strong focus on improving quality and the customer experience.
Posti will pursue growth in e-commerce and related solutions, end-to-end
logistics solutions ranging from transport to in-house logistics, new services
and OpusCapita.

At the core of the strategy are four objectives that will allow Posti to achieve
renewal and emerge as a winner through this period of transformation: success in
e-commerce, maintaining the importance of letters among customers, the renewal
of Posti's service culture, and leveraging the digital transformation to improve
Posti's services.

The third quarter of the year was challenging for Posti. Net sales grew by
nearly one percent, but the result was modest. Among the positives during the
period were strong parcel growth and the high volumes of freight operations. The
challenge was the steep decline in the volume of letters, which we were not able
to fully compensate for in our production in the third quarter.

The restructuring of the OpusCapita segment is moving ahead as planned. The new
OpusCapita will focus on B2B customers by providing global solutions for
sourcing, invoice processing, cash management and financing."

APPENDICES

Posti Group's Interim Report in full (PDF)

FURTHER INFORMATION

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

FINANCIAL CALENDAR IN 2018
Financial statements for 2017: March 1, 2018, at 10:00 a.m.

DISTRIBUTION
NASDAQ OMX Helsinki
Key media
www.posti.com/talous

IMAGES AND LOGOS
www.posti.com/media



Posti is a service provider that delivers the smartest and most customer-focused
postal and logistics services in the market. Posti is expanding into new service
areas and playing an increasingly significant role in the daily life of its
customers. We operate in 11 countries, our net sales in 2016 amounted to EUR
1,600 million and the number of our personnel is approximately 20,500. Our
businesses also include the logistics service provider Itella Russia and the
electronic business specialist OpusCapita. www.posti.com.


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Attachments:

Posti-Group-Interim-Report-Q3-2017.pdf