PostNord Year-end report 2023 – Improved income despite reduced sales

Comments from Annemarie Gardshol, CEO

Improved income in the fourth quarter

The end of the year, with Black Week and Christmas shopping, is our most intense period. Overall, we are satisfied with how we performed during our peak period, despite challenging weather conditions that affected access.

Work during the year was characterized by ongoing and decisive actions to address lower parcel and mail volumes and high costs arising from high inflation. In the quarter, several of our segments – and the Group as a whole – report improved income. This is the first time since the end of the pandemic in the second quarter of 2021 that the Group's operating income has increased. Nevertheless, we continue to experience a challenging world situation. As a result, we are continuing to adjust prices, and capacity, and to maintain the pace of our improvement programs. We are also continuing to work on increasing flexibility in our business model.

Competitive Nordic parcels business

PostNord aims to be the market and cost leader in parcels in the Nordic region. Parcel lockers are a popular option and we are rapidly expanding our network of parcel lockers. At the end of the quarter, we were operating about 17,000 parcel distribution points – parcel lockers and distribution points – that complement our home delivery offering. During the year, we launched a wide-ranging Cost Leadership program that includes a common product portfolio for the Nordic parcels market and that will generate structurally higher profitability over time.

To keep improving our products and services, it is important for us to constantly develop technological solutions that help us work smarter and more efficiently. In Sweden, we have developed a digital copy of production data linked to our terminal in Örebro. This makes it possible to test new flows or have AI identify improvement measures. This project received recognition through an award at Parcel+PostExpo, in the Sorting & Fulfillment Technology of the Year category. In Denmark, we are developing a completely new production model for the delivery of parcels. The model meets, to a much greater extent, the requirements for flexibility and productivity in the “last mile”.

Financially sustainable mail business

We are the proud provider of the universal postal service in Sweden. During the quarter, we continued to implement quality-enhancing measures to ensure high mail quality, going forward. A year ago, the main report from the Commission of Inquiry into Financing for the Postal Service was presented to the government. The report states that the universal service obligation involves a net cost for PostNord as a provider. We want decisions on regulatory relief, in the form of revised quality requirements, to be taken as early as possible. This would defer the time at which the mail business can no longer be operated without State aid.

As of January 1, 2024, the Danish universal service obligation has ceased. Exemptions apply to shipments to small islands, the visually impaired and international mail. The Danish Ministry of Transport has decided that PostNord Denmark should maintain these three specific tasks until procurement exercises have been completed. Compensation for the distribution service will be paid in accordance with the provisions of the Danish Postal Services Act. In Denmark, we are rapidly adjusting our organization, offering and prices to meet the new reality.

High pace for our climate agenda

We have set a prioritized climate agenda with the goal of being fossil-free by 2030. In the quarter, carbon dioxide emissions decreased by 16 percent, compared with the fourth quarter in 2022.

.

Contact person: Björn Bergman, Head of Group Brand & Communication. 

This information is of such a nature that PostNord AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted, through the agency of the contact person stated above, for publication at 8:30 CET on February 1, 2024.