Itella 2012

 

Board of Directors' Report 2012

Business environment

After a promising first quarter, the Finnish economy slipped onto a downward trend during late spring and early summer. In line with this general trend, Itella's net sales also developed positively during the first half of the year, but slowed down during the second quarter and came to a complete stop during the third. The final quarter was challenging, particularly in terms of Itella Logistics' road, air and sea freight operations.

In respect of Itella's business environment, the integration of VR -Transpoint's groupage logistics into Itella Logistics constituted one of the most important changes that took place during the year. Among other things, this transaction between two strong industry operators means that Itella's customers now have at their disposal the widest network of terminals and the most comprehensive transportation capacity in Finland.

As anticipated, electronic replacement showed signs of acceleration, in addition to which the downward trend in the volumes of newspapers and magazines continued. Changes in the competitive environment are prepared for by the continuous development of Itella's own delivery network. The number of automatic parcel terminals – introduced to the Finnish market in 2011 – has been increased. In 2012, the Group put into operation a total of one hundred new automated parcel terminals and pick-up outlets. Recipients' chances to route shipments addressed to them have also been improved on a continuous basis. The parcel routing service introduced to consumers during the year allows them to route their online store parcels to the Posti outlet of their choice. In addition to Posti shops, such outlets include pickup outlets managed by our partners and Posti's parcel terminals.

The volumes of addressed letters continued to decline. This trend is also evident in the growing volumes of electronic letters. Newspaper and magazine volumes continued to fall as well. This decline was accelerated by the nine percent value added tax recently levied on newspapers and magazines.

The digitization of invoicing and financial management impacts Itella's business, offering business opportunities to Itella Information, in particular.

Cost-cutting program

In August 2011, Itella initiated an extensive cost-cutting program with the objective of accruing savings in excess of EUR 100 million over the next three years. The program has proceeded according to schedule in both the business groups as well as in the Group's centralized operations. The savings achieved in 2012 were generated particularly through restructuring measures and efforts aimed at increasing efficiency and sourcing.

Profit performance and net sales

Itella Group's net sales in 2012 totaled EUR 1,946.7 (1,900.1) million representing growth of 2.4 percent. In local currencies, the increase in net sales was 1.9 percent. Corporate acquisitions did not have a significant effect on development at the annual level, but the increase in sales during the final quarter reflected the integration of VR Transpoint's groupage logistics. The Group's net sales grew in all business groups except Itella Information. Net sales increased in Finland by 4.6 percent, and declined by 1.9 percent in other countries. International operations accounted for 31 percent (33 percent) of net sales.

The operating result before non-recurring items improved to EUR 53.2 (30.5) million, or 2.7 percent (1.6 percent) of net sales. Operating result before non-recurring items improved in Itella Mail Communications and Itella Information, and declined in Itella Logistics.

Performance in 2012 was strained by non-recurring items in the amount of EUR 14.2 (36.4) million, of which EUR 3.8 (27.0) million related to personnel restructuring, EUR 3.0 million to Logistics' lease provisions, and EUR 7.3 (9.4) million to other items. At the end of May, Itella Information sold its German subsidiary to the subsidiary's operative management. This transaction generated a non-recurring cost item of EUR 14.3 million. The additional purchase price of the Russian logistics corporation NLC acquired by Itella Logistics in 2008 was confirmed, resulting in a non-recurring positive performance impact of EUR 7.0 million.

The Group recorded an operating result of EUR 39.0 (-5.9) million, representing 2.0 percent (-0.3 percent) of net sales. Operating result improved in all business groups.

The Group's net financing costs amounted to EUR 8.3 (10.6) million.

The Group's operating result after financial items amounted to EUR 30.8 (-16.4) million. Income tax totaled EUR 16.7 (14.2) million.

The Group's operating result for the period amounted to EUR 14.1 (-30.7) million.

Return on equity stood at 2.1 percent (-4.5 percent).

Key figures of Itella Group

  2012 2011 2010
Net sales, MEUR
1,946.7 1,900.1 1,841,6
Operating result (non-IFRS), MEUR *)
53.2 30.5 49.6
Operating result (non-IFRS), % *) 2.7 1.6 2.7
Operating result (EBIT), MEUR
39.0 -5.9 32.4
Operating result (EBIT), % 2.0 -0.3 1.8
Result before taxes, MEUR
30.8 -16.4 25.3
Result for the period, MEUR
14.1 -30.7 9.3
Return on equity, %, 12 months
2.1 -4.5 1.4
Return on investment, %, 12 months
4.8 -0.2 4.2
Equity ratio, % 46.4 46.1 50.5
Gearing, % 23.4 22.1 18.4
Gross capital expenditure, MEUR
134.7 102.9 89.5
Employees on average
27,460 28,493 28,916
Dividends, MEUR
6.8 **)   4.4

*) Non-IFRS = excluding non-recurring items
**) Board of Directors' proposal

Itella Mail Communications

Itella Mail Communications' net sales increased by 1.4 percent to EUR 1,167.6 (1,151.7) million. The increase in net sales during the final quarter was largely attributable to the positive development in parcel volumes.

The share of operations subject to the universal service obligation amounted to EUR 139.1 (125.1) million, or 11.9 percent (10.9 percent) of Itella Mail Communications' net sales.

The business group's operating result improved, and totaled EUR 74.0 (31.4) million, or 6.3 percent (2.7 percent). The operating result before non-recurring items amounted to EUR 74.0 (49.8) million. The reporting period did not include non-recurring cost items (EUR 18.4 million).

In 2012, the delivery volumes of mail items developed as follows in comparison to the corresponding period in the previous year:

  • Newspapers, -8 %
  • Magazines, -5 %
  • Total volume of addressed letters, -4 %
  • Unaddressed direct marketing, +20 %
  • Parcel services, +5 %
  • Electronic letters, +36 %

The growth in parcel services continued to be robust, particularly in terms of online commerce. Itella increased its market share. The growth in unaddressed direct marketing also continued throughout the year, and we increased our market share despite tough competition.

The volumes of addressed letters continued to decline. This trend is also evident in the growing volumes of electronic letters. Newspaper and magazine volumes continued to fall as well. This decline was accelerated by the nine percent value added tax recently levied on newspapers and magazines.

Itella Mail Communications' business environment is subject to the effects of the new Postal Act, which opened up competition to other operators. In March, Esan kirjapaino Oy was issued a license for regional letter deliveries. Itella's readiness to respond to changes in the competitive environment is maintained through the continuous development of the delivery network's quality and productivity. In 2012, the Group put into operation a total of one hundred new automatic parcel terminals and pick-up outlets. Recipients' chances to route shipments addressed to them have also been improved on a continuous basis. The parcel routing service introduced to consumers during the year allows them to route their online store parcels to the Posti outlet of their choice. At the end of 2012, there were 1,098 such outlets.

The investments of Itella Mail Communications totaled EUR 26.8 (33.3) million. The most significant of these involved the new point-of-sale system employed in Posti shops and production maintenance investments.

Itella Logistics

Itella Logistics' net sales grew by 6.8 percent, to EUR 781.5 (731.6) million. Net sales increased, driven by the integration of VR Transpoint. Growth was furthermore spurred by positive development in Russian operations as well as contract logistics in Finland.

The business group's operating loss before non-recurring items increased from the year before, and stood at EUR 12.0 (-6.4) million. In terms of the entire year, Itella Logistics recorded an operating loss of EUR 9.5 (-15.7) million, representing -1.2 percent (-2.1 percent) of net sales. Performance declined due to the continuing business challenges in Scandinavia and the warehouse accident that occurred in Russia in July 2012. Profitability decreased in air and sea freight. On the other hand, the additional purchase price of the Russian logistics corporation NLC acquired by Itella Logistics in 2008 was confirmed, and this had a non-recurring positive performance impact of EUR 7.0 million.

A large part of the shelf system in Itella Logistics' Shushary warehouse in St. Petersburg collapsed in July 2012. The accident damaged a substantial number of customers' products, and has also necessitated environmental protection and cleanup measures. Freight operations, the office, and customers' logistics services were transferred to a temporary office in Utkina Zavod. Repair measures are underway, and we expect to have the premises back in use by April 2013. Itella has insurance policies that cover its liabilities in accidents such as these (excluding business interruption insurance). Assessments concerning liability issues and the calculation of the insurance indemnity are underway, but the indemnity is yet to be paid. The total loss is estimated to amount to EUR 31 million, of which a EUR 7.7 million expense strains performance.

Itella Logistics' investments–in the logistics center located in Pennala, Orimattila, ICT upgrades, and the integration of VR Transpoint's groupage logistics–totaled EUR 90.4 (31.0) million. The most significant of these investments is the new logistics center being built in Pennala, Orimattila. The construction of this logistics center, set to be completed in 2013, began in 2011, and the total investment amounts to more than EUR 60 million.

Itella Information

Itella Information's net sales declined slightly (-1.3 percent), to EUR 270.1 (273.7) million. The decline was influenced by the sale of the printing business in Germany.

The operating result before non-recurring items improved to EUR 15.6 (3.2) million. This represents 5.8 percent (1.2 percent) of net sales. The improvement was attributable to the sale of the printing business in Germany, the efforts to increase efficiency carried out at the end of the previous year, and the increase in sales in print operations and outbound services. The business group's operating result improved to EUR -1.1 (-4.1) million.

Outbound and e-Services developed positively in Finland and Sweden due to the iPost and iBilling solutions, in particular. Financial management outsourcing services gained new customer accounts, but the business's profitability remains modest. This is the result of investment in growth, process development, and internationalization. After a challenging spring, payments automation services (OpusCapita) were back on a positive track in the second half of the year. Cloud services grew by more than 100 percent. The economic recession offers new business opportunities for Itella Information.

At the beginning of 2013, Itella Group's payroll services transferred from Silta Oy to being managed by Itella Information.

In June, Itella Information sold its German subsidiary, Itella Information GmbH, which operates in the printing services business, to the company's operative management. Due to the sale of the subsidiary, which was carried out as a management buyout, some one hundred people transferred from Itella to the employment of the new company, docsellent GmbH. The transaction is shown in the second quarter results as a non-recurring loss of EUR 14.3 million.

The business group's investments amounted to EUR 5.8 (30.0) million. The investments are largely related to activated development projects and the printing business's maintenance investments.

Key Figures of Business Groups, MEUR

  2012 2011 Change
Net sales
 

Itella Mail Communications
1,167.6
1,151.7
1.4 %
Itella Logistics
781.5 731.6 6.8 %
Itella Information
270.1 273.7 -1.3 %
Other activities
63.1 55.8 13.2 %
Intra-Group sales
-335.6 -312.7 7.3 %
Itella Group
1,946.7
1,900.1
2.4 %
       
Operating result (non-IFRS) *)



Itella Mail Communications
74.0 49.8 48.5 %
Itella Logistics
-12.0 -6.4 neg
Itella Information
15.6 3.2 ..
Other activities
-24.4 -16.1 neg
Itella Group
53.2 30.5 74.4 %
       
Operating result (EBIT)

 
Itella Mail Communications
74.0 31.4 ..
Itella Logistics -9.5 -15.7 39.5 %
Itella Information -1.1 -4.1 72.2 %
Other activities
-24.4 -17.5 neg
Itella Group
39.0 -5.9 ..
       
Operating result (non-IFRS), % *)

 
Itella Mail Communications
6.3 %
4.3 %
 
Itella Logistics -1.5 %
-0.9 %
 
Itella Information 5.8 %
1.2 %
 
Itella Group
 2.7 %
 1.6 %
 
       
Operating result (EBIT), %      
Itella Mail Communications
6.3 % 2.7 %  
Itella Logistics -1.2 % -2.1 %  
Itella Information -0.4 % -1.5 %  
Itella Group
2.0 % -0.3 %  

*) Non-IFRS = excluding non-recurring items

Other activities of the Group

Itella's subsidiary Itella Bank Ltd. began its operations as a deposit bank at the beginning of 2012. Itella Bank specializes in the transmission of payment and invoicing data, particularly with regard to online commerce, parcel services, and other postal affairs.

The Post Museum located in the General Post Office in Helsinki was closed. The new Post Museum will be opened in Museum Centre Vapriikki in Tampere in 2014.

Business risks

In 2012, risk management focused particularly on continuing to improve the quality and extent of the risk management process. The Group's key strategic risks involve the markets, the business environment, the ability of business operations to develop, and regulation. The principal operational risks, on the other hand, involve first and foremost the profitability of business, as well as business interruptions and other disruptive risks. Any deepening of the economic recession, acceleration in the spread of digital services, or increase of already significant competition would have an adverse effect on growth.

Strategic and operational risks

Any protraction of the economic downturn may have an impact on the activities of companies and consumers and, consequently, on the volumes of products transported by Itella. Turbulence in the financial markets and any related disturbances may also pose a risk to Itella's business operations.

Significant market risks are considered to include a faster-than-expected rate of replacement (in electronic alternatives replacing traditional postal delivery) and any unanticipated changes in this area, such as an increasingly steep decline in the volumes of letters, magazines, and newspapers. Itella strives to develop its operations continuously to minimize this risk.

Any possible protraction in the integration of the acquired companies and their operations to the Group and, consequently, in the management of corporate acquisitions, would constitute both direct financial losses as well as a strategic risk that would constrain business development. Our goal is to ensure the successful integration of corporate acquisitions through careful monitoring. The integration of VR Transpoint's groupage logistics–which Itella acquired in 2012–to the Finnish business operations of our Logistics business group is vitally important for the development of our competitiveness and the management of profitability in our home market.

In terms of Logistics, increasing international competition and the resultant decline in volumes in the Nordic countries is also considered a risk.

In Russia, the development of the social, legislative, and overall business environment may come to constitute a significant market risk for Itella. Itella Logistics' investments in Russia are substantial. Our risk management measures include the continuous monitoring of developments and trends, as well as a solid establishment in the Russian market by means of Itella's own companies and personnel and effective networking.

A large part of the shelf system in Itella Logistics' Shushary warehouse in St. Petersburg collapsed in July 2012. The accident damaged a substantial number of customers' products, and has also necessitated environmental protection and cleanup measures. Itella has insurance policies that cover its liability in such eventualities (excluding business interruption insurance). The assessment of liability and the calculation of the insurance indemnity are underway, but the indemnity is yet to be paid. Thus the ultimate effects of the accident are yet to be ascertained. An insurance receivable has been recognized under other receivables.

Itella Information's capacity to develop the outsourcing of financial processes and the processes associated with them during a period of rapid growth involves an operational risk.

Itella's position as an operator with a partially dominant market position and as a producer of universal services may introduce risks involving government regulation or supervision. At the moment, these risks relate, in particular, to Itella Posti's pricing solutions in terms of letter and parcel products–an issue that involves the interpretation of the former Postal Services Act, which remained in force until the end of May 2011. The related dispute between Itella and the Finnish Communications Regulatory Authority is pending. Should the court's findings be unfavorable from Itella's point of view, the financial repercussions for the company will be considerable.

Itella Bank's risk management measures relate to that of a credit institution and comply with the relevant regulations issued by authorities. The aforementioned risks are described in more detail in the Bank's financial statements.

The rigidity of cost structures slows the improvement of profitability, especially in Finland; and the universal service obligation presents a further constraint on the potential for increasing efficiency. As volumes decline, a new economic downturn would further complicate efforts to maintain profitability.

The protection and development of key production and warehouse facilities and the continuity of IT infrastructure are of utmost importance in the management of operational risks related to loss and interruption. Should such risks (for example a fire) materialize, they could result in a substantial loss of customer accounts and losses in value for Itella.

Regarding other business disruption risks, the most significant involve the vulnerability of information security, networks, and the production infrastructure. These risks are both operational and image-related in nature.

Other risks:

An account of financial risks and their management is available in the Notes to the Financial Statements.

Insurance has been taken out to cover all risks for which insurance is the best alternative for financial or other reasons. Insurance policies concerning business continuity, property, and liabilities as well as certain insurance policies relating to personnel are managed centrally, at Group level. Liability risks include risks arising from operations and products as well as corporate management liabilities. The determination of deductibles accounts for the Group's risk-bearing capacity.

Changes in corporate structure

On May 30, 2012, Itella sold the entire capital share of Itella Information GmbH to the subsidiary's operative management.

Regarding associated companies, Itella sold AS Eesti Elektron Post in Estonia on September 24, 2012 and Ageris Kontacktcenter AB, based in Sweden, on December 21, 2012.

The business acquisition between Itella Logistics Oy and VR Group was finalized on October 1, 2012. The transaction transferred VR Transpoint's groupage logistics business in Finland and the related entire capital share of PT Logistiikka Oy to the ownership of Itella Logistics.

Itella Customer Relationship Marketing Ltd. and OpusCapita Group Oy merged with their parent company Itella Corporation on December 1, 2012. In Denmark, the companies KEC A/S, Spedition Dyhr Eftf A/S, and Honold Combifragt Logistics A/S merged with Itella Logistics A/S, also on December 1, 2012.

Itella Real Estate Oy, which specializes in property management, sold the entire capital share of KOY Sahronmaa on June 6, 2012.

Capital expenditure

The additions to Itella Group's intangible assets and PPE amounted to EUR 92.9 (72.5) million. EUR 41.8 (30.4) million was spent on business combinations. A total of 93 percent of the Group's investments were allocated to Finland. A more detailed account of investments is available in the financial reports of each business group.

Research and development

Itella Group's research and development expenditure in 2012 totaled EUR 15.2 million, or 0.8 percent of the Group's total operating expenses. The corresponding figures in 2011 and 2010 were EUR 14.0 million (0.7 percent) and EUR 9.5 million (0.5 percent), respectively.

Itella Mail Communications concluded a multi-year development and implementation project concerning the Posti shop system, and carried out a complete reform of post box services. The productization of addressed letter, magazine, and advertisement delivery services was simplified. Furthermore, the business group introduced a rerouting service to the market, with which mail recipients may route shipments to a location of their choice. The service was first introduced in relation to parcel services. The development of online services targeted at the customers of marketing services, small and medium-sized companies, and consumers was continued by way of updating, among others, the aTarget, Netposti, and Well-wisher's Address Book services and by creating the Itella Network service package for small and medium-sized companies. Computer-supported processes for the management and monitoring of operating statements, the development portfolio, and the work contribution of the company's own personnel were created to raise the productivity of development.

In Mail Communications, research focused on the spread of the use of social media and its effects on the demand for postal services, as well as on the significance of communality in the development of print and electronic media. In addition, research activities involved the advancement of the electronification of consumer invoices and the factors that have a bearing on such development, the structure and electronification of letter traffic, the importance of online shops as a channel for buying Christmas gifts, and the trends in subscriber activity regarding newspapers and magazines in the next few years.

Itella Logistics invested in a new warehouse management system and freight operating system. After VR Transpoint's groupage logistics and PT Logistiikka became a part of Itella Logistics, the development concerning the optimization and transport management systems of the domestic transport business was also continued.

Itella Information continued the development of the OpusCapita products–designed designed for the automation of cash flows—by introducing new mobile and cloud service solutions to the market and by further investment in the user-friendliness of the products.

Itella Bank's systems were also one of the focal points of development work.

Environmental impacts

The vast majority of the environmental impact attributable to Itella's operations is related to greenhouse gas emissions. Itella has made a commitment to reduce its carbon dioxide emissions by 30 percent by the year 2020 (in proportion to net sales, year of comparison 2007). This emissions target and the reporting system that supports it encompass all of Itella's business operations and countries of operation.

Our special focus in 2012 was on the energy-efficiency of our properties. Thanks to the measures carried out in Finland during 2012, the electricity consumption of our properties fell by more than three percent and standardized heat consumption by almost seven percent. Our goal is to cut electricity consumption by two percent and heat consumption by three percent annually up until 2015.

Itella publishes a Corporate Responsibility Report in connection with the 2012 Financial Statements. This Report will contain more detailed accounts of environmental considerations and issues. The past year was the first one during which Itella commissioned a verification of the environmental responsibility data to be published for 2012 and an audit of the GRI level. The verification and audit were carried out by PricewaterhouseCoopers Oy.

Financial position

The consolidated cash flow from operating activities increased and totaled EUR 118.9 (85.7) million before investments. Expenditure on investments and corporate acquisitions amounted to EUR 115.0 (76.3) million, of which corporate acquisitions and sales accounted for EUR 55.9 (23.7) million.

The EUR 100 million domestic bond issued by Itella Corporation in December 2011 was listed on the Helsinki Stock Exchange, managed by NASDAQ OMX Helsinki, on January 16, 2012. The bond's loan period is six years and it has a fixed yield of 4.625 percent.

At the end of 2012, liquid assets amounted to EUR 148.3 (177.7) million, and undrawn committed credit facilities totaled EUR 120.0 (120.0) million. The Group's interest-bearing liabilities were EUR 324.8 (335.5) million. The equity ratio stood at 46.4 percent (46.1 percent) and gearing was 23.4 percent (22.1 percent).

Share capital and shareholding

Itella Corporation is wholly owned by the State of Finland, its share capital consisting of 40,000,000 shares of equal per-share value. The company holds no treasury shares and does not have subordinated loans. No loans have been granted to related parties and no commitments have been given on their behalf. The company has not issued shares, stock options, or other rights with entitlement to company shares. The Board of Directors is not authorized to issue shares, stock options, or other rights with entitlement to company shares.

Administration and auditors

Itella Corporation's Annual General Meeting was held in Helsinki on March 14, 2012. The General Meeting adopted the 2011 financial statements and discharged the Supervisory Board, Board of Directors, and President and CEO from liability.

The General Meeting also decided that the Board of Directors be composed of eight members in 2012. Arto Hiltunen continues to chair the Board of Directors, and Päivi Pesola continues as the Board's Vice Chairman. Ilpo Nuutinen was elected to join the Board as a new member. Hele-Hannele Aminoff, Jussi Kuutsa, Timo Löyttyniemi, Riitta Savonlahti, and Maarit Toivanen-Koivisto continued as Board members in 2012.

Itella's Supervisory Board was composed of 12 members in 2012. New members elected to the Supervisory Board were Ritva Elomaa, MP (Finns); Lars-Erik Gästgivars, MP (Swedish People' Party); Mauri Pekkarinen, MP (Centre Party); Raimo Piirainen, MP (Social Democratic Party); Tuomo Puumala, MP (Centre Party); Teuvo V. Riikonen, Executive Manager; and Kimmo Sasi, MP (National Coalition Party). Mauri Pekkarinen, MP, was elected Chairman of the Supervisory Board and Johanna Karimäki, MP, Vice Chairman of the Supervisory Board. Continuing members include Johanna Karimäki, MP (Greens of Finland); Susanna Huovinen, MP (Social Democratic Party); Sari Moisanen, student (the Left Alliance); Outi Mäkelä, MP (National Coalition Party); and Reijo Ojennus, entrepreneur (Finns).

The authorized public accountancy firm PricewaterhouseCoopers Oy was elected as Itella Corporation's auditor in 2012, with Authorized Public Accountant Merja Lindh acting as the principal auditor.

Jukka Alho (M.Sc. Tech.) served as Itella Corporation's President and CEO until December 10, 2012. He was succeeded by Heikki Malinen (M.Sc. Econ., MBA) as of December 11, 2012.

Human Resources

At the end of 2012, Itella Group employed 27,816 (27,585) people, with the average number of personnel being 27,460 (28,493). If part-time employees are converted to full-time employees, this corresponds to 23,676 (24,616) person-years, of which an average of 5,859 (6,370) work abroad.

Personnel distribution was as follows:

Itella Mail Communications
17,844
Itella Logistics
7,391
Itella Information
2,168
Group and other activities
413

The number of employees working outside Finland was 5,997 (6,462), and the number of employees working in Finland was 21,819 (21,123). At the end of 2012, the parent company had 386 (336) employees. The parent company's average number of employees was 379 (350).

Group personnel

  2012 2011 2010
Wages and salaries, MEUR
713.8 731.8 706.3
Employees on Dec 31
27,816 27,585 29,022
Employees on average
27,460 28,493 28,916

The Group's personnel expenses decreased by EUR 25.5 million, or by approximately 2.8 percent in comparison to the previous year. Personnel expenses included restructuring costs in the amount of EUR 3.8 (27.0) million. The operating result for the period included a EUR 3.1 million expense provision for the purposes of the entire personnel's bonuses. There are also provisions for the purposes of the annual incentive plan and the management's long-term incentive plan.

At the end of the review period, the number of employees in Finland had increased by 696 in comparison to the previous year. The number increased due to the personnel of VR Transpoint's groupage logistics and PT Logistiikka Oy, who transferred to Itella's employment.

The company also signed 772 new full-time employment contracts in Finland in 2012. Personnel reductions amounted to a total of 435 person-years. Out of this total, 408 person-years were reduced for production-related and financial reasons, and 27 person-years were reduced via voluntary resignations and pension plans.

Events after the reporting period

At the beginning of 2013, Itella Group's payroll services transferred from Silta Oy to being managed by Itella Information.

The first phase of the new logistics center under construction in Pennala, Orimattila, was completed at the beginning of 2013. Work on the second phase began in January 2013, and the entire facility will be completed in the summer of 2013.

Outlook for 2013

Net sales in 2013 are expected to increase significantly, partly due to the acquisition of VR Transpoint. The Group's operating result before non-recurring items is expected to improve.

The net sales of Itella Mail Communications are expected to remain at the level of the previous year, whereas its operating result is expected to decline slightly due to traditional services being replaced by electronic ones, as well as due to the decline in delivery volumes.

Itella Logistics' net sales are expected to increase significantly as a result of the acquisition of VR Transpoint's groupage logistics business. The operating result is expected to turn positive.

The net sales of Itella Information are expected to grow, even without the effect of the sale of the printing business in Germany. The operating result is expected to increase clearly.

The amount of investment is expected to decrease in comparison to last year.

Board of Directors' proposal to the AGM

According to the financial statements, the parent company's distributable funds total EUR 623,460,452.09, of which the loss for 2012 accounts for EUR 13,437,847.83.

No material changes have taken place in the Group's financial standing since the end of the financial period, nor does the solvency test, as referred to in Section 13(2) of the Finnish Limited Liability Companies Act, affect the proposed distributable profit.

The Board of Directors proposes to the General Meeting that the distributable funds be allocated as follows:

  • a dividend of EUR 0.17 to be paid per share, or a total of EUR 6,800,000.00
  • retaining EUR 616,660,452.09 under shareholders' equity.

Helsinki, February 13, 2013

Itella Corporation

Board of Directors