Itella Oyj - Interim report (Q1 and Q3)

ITELLA CORPORATION STOCK EXCHANGE RELEASE JULY 27, 2011, AT 10:00 A.M. (EET)

Itella Interim Report for January-June 2011

January-June 2011

  -- The Itella Group's net sales in the first half of 2011 totaled EUR 932.6
     million (EUR 904.6 million in January-June 2010). International operations
     accounted for 33% (31%) of net sales.
  -- The Group posted an operating loss of EUR 3.4 million (operating profit of
     EUR 12.1 million), representing -0.4% (+1.3%) of net sales.
  -- Itella Mail Communications recorded constant net sales, while profitability
     declined considerably. The most important contributing factor was the
     reduction in mail delivery volume.
  -- In Itella Information, net sales increased slightly, but profitability
     declined.
  -- Itella Logistics clearly increased its net sales but remained in the red. 
  -- The Finnish Parliament approved the new Postal Act, which entered into
     force on June 1, 2011. Itella's subsidiary Itella Posti Oy has the license
     for universal service.

April-June 2011

  -- In April-June, the Itella Group recorded net sales of EUR 469.7 million
     (EUR 450.6 million).
  -- The Group recorded an operating loss of EUR 4.7 million (operating loss of
     EUR 6.3 million), representing -1.0% (-1.4%) of net sales. This included
     EUR 0.3 million (EUR 14.5 million) of restructuring costs.



Key figures of Itella Group          1-6 /2011  1-6 /2010     2010
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Net sales, MEUR                          932.6      904.6  1,841.6
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Operating result (EBIT), MEUR             -3.4       12.1     38.1
------------------------------------------------------------------
EBIT margin, %                            -0.4        1.3      2.1
------------------------------------------------------------------
Operating result (EBIT), MEUR *)          -3.1       25.9     55.3
------------------------------------------------------------------
EBIT margin, % *)                         -0.3        2.9      3.0
------------------------------------------------------------------
Result before tax, MEUR **)               -8.1       11.5     31.0
------------------------------------------------------------------
Return on equity (12 months), %           -0.6       -0.2      1.4
------------------------------------------------------------------
Return on investment (12 months), %        2.4        4.7      4.2
------------------------------------------------------------------
Equity ratio, %                           49.6       50.3     50.5
------------------------------------------------------------------
Gearing, %                                21.7       21.8     18.4
------------------------------------------------------------------
Gross capital expenditure, MEUR           23.8       43.4     81.9
------------------------------------------------------------------
Personnel on average                    28,753     28,982   28,916
------------------------------------------------------------------
Dividends, MEUR                                                4.4
------------------------------------------------------------------
*) Excl. restructuring costs                                      
**) Continuing operations                                         




Jukka Alho, President and CEO:

“Itella's profitability in January-June was clearly unsatisfactory, and the
result was below the target. Compared with last year, the main difference is
the sharp reduction in the profitability of basic postal operations in Itella
Mail Communications. 

The digitalization of communication affected the delivery volumes of magazines
and newspapers faster than expected. Compared with many other countries, letter
volumes are still high in Finland, but the increased popularity of second class
letters has considerably reduced income and profitability. On a positive note,
the continuous growth of distance selling has increased the delivery volumes of
parcels. 

Itella Logistics still recorded a loss, despite a good increase in net sales.
Particularly in Finland, net sales and profitability have developed positively.
There is a considerable need for improvement of profitability in Sweden,
Denmark, and Russia. In Russia, net sales have developed well, and in the
Moscow area the warehouse utilization rate is back at a healthy level. The
logistics market in the Moscow area is approaching a situation where demand
exceeds capacity. Other parts of Russia are only just starting to recover from
the financial crisis. 

Itella Information is going through a strategically significant stage of
development, with the focus of business increasingly shifting to offering
outsourcing solutions for financial administration. Profitability was burdened
by structural changes in business and a general downward trend of printed
invoices. 

The structural change of postal operations will require forceful cost control
measures. Therefore, we must view all operations with a critical eye and also
consider divesting. In order to guarantee efficient postal services throughout
Finland, we must adjust the number of personnel to match customer demand. 

The question of financing universal service was left open in the new Postal
Services Act, to be decided on later. Even faster than expected, we are
approaching the day when today's level of nationwide postal services can no
longer be maintained solely with fees paid by customers. Political decisions
will be necessary then: is it acceptable to adjust the service level to the
income from customers, or will the postal services partly be financed with
taxes?” 



APPENDICES
Itella's full Interim Report


FURTHER INFORMATION
Tuija Soanjärvi, CFO, tel. +358 20 45 20907, tuija.soanjarvi@itella.com


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

FINANCIAL CALENDER 2011
Interim Report for January-September on Wednesday October 26.

PHOTOGRAPHS AND LOGOS
www.itella.com/media



Itella Group provides solutions for managing information and product flows.
Itella operates in mail communication, information logistics and logistics in
Europe and Russia. Net sales in 2010 amounted to EUR 1,842 million. The number
of staff is about 28,000. Corporate services are delivered under the Itella
brand, while the Posti brand is used for services targeted at consumers in
Finland. More information is available online at www.itella.fi/group/english.

Attachments:

Itella_stock_exchange_bulletin_Q2_2011.pdf