A strategic plan to improve profitability at PostNord has enabled the company to achieve a 195.3% y-o-y growth in operating profit in the first financial quarter, even as mail and parcel volumes fell.
Revenues at the Nordic postal and parcel operator fell by 4% in the quarter to SEK 9,500m (€811.8m). Operating profit however grew by over 195% to SEK 127m (€10.85m). Even while mail volumes dropped 14% y-o-y and parcel volumes fell 4%, y-o-y, CEO Annemarie Gardshol explained that the strong profit growth was due to a strategic plan instituted in 2023, “To establish structurally improved profitability over time and thus to improve our competitive strength.”
The proof of the pudding is in the eating according to Gardshol, who pointed out, “The fact that the Group’s operating income has increased for the second consecutive quarter confirms that our measures and our focus on costs are generating the desired result.”
The first major event to affect PostNord in the quarter was the official ending of the Danish Universal Service Obligation (USO) on 1/1/2024. The Swedish USO is once again under review in the Swedish government’s Postal Finances Inquiry that is considering new state aid and regulatory reform to maintain mail delivery in the country. Mail volumes have halved since 2018 and according to Gardshol, are set to halve again by 2030. She said, “We are keen to see a decision made in line with the proposals of the Postal Finance Inquiry as soon as possible”.
As part of the strategic plan that in this quarter has achieved such a dramatic improvement in profitability, from May 2024 there is to be a top level reorganisation at PostNord. Gardshol explained, “The entire PostNord product organisation will be brought together in a single Nordic unit. This unit will be tasked with supporting the countries and our international business by continuing to establish a competitive product portfolio harmonised for the Nordic region.”
The ongoing strategic change programme is aimed at further improving the profitability at PostNord as a whole. As an organisation transitioning from being a mail operator to a parcels carrier, such moves should set the company up well for the new challenges it faces ahead.
Author: Richard Shrubb
Source: Ti Insights
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