Annual Report 2015

BOARD OF DIRECTORS' REPORT 2015

Operating environment 2015

The economic climate was challenging in 2015. The trend appeared positive until June 2015, with growth in the national economy. However, the situation took a turn for the worse in June and deteriorated further toward the end of the year. Consumer demand remained weak.

Posti’s parcel services volume grew by 2% (2%) year-on-year, and market share increased slightly. Posti delivered more than 33 million parcels during the year. The number of parcels going through Posti’s parcel points grew by 42% year-on-year. Parcel volumes grew until June. In Posti’s parcel volume, the turn for the worse occurred in the fall, trailing the negative turn in the overall market by one quarter.

In postal services, the decline in volume was steeper in the final quarter. The volume of addressed letters decreased by -10% in October–December, and the rate of decline for the full year was -8% (-10%). The volumes of unaddressed deliveries increased as a result of Postinen, which was launched in March. Newspaper delivery volumes declined by -27% (-13%), largely due to the expiration of early-morning delivery agreements in 2014. Magazine delivery volumes declined by -9% (-10%).

Industrial action late in the year had a negative impact particularly on parcel services, as customers sought alternative delivery channels in the busy Christmas season.

The situation in the Russian market deteriorated substantially toward the end of the year. The ruble exchange rate fluctuated significantly throughout the year, and the closing rate was down 12% year-on-year. The general economic climate is weak. Warehouse processing volumes fell and the demand for air and sea freight declined. The final quarter of 2015 was substantially weaker than the previous year. The warehouse fill rate remained at a good level, but processing volumes fell substantially.

The decline in traditional mail delivery volumes and the accelerating shift from paper to online communications was reflected in OpusCapita’s operations, particularly in the volumes of iPost products. OpusCapita transmitted a total of 540 million transactions during the year. The total transaction volume includes printed letters, mailed paper letters, and electronic transactions. The electronic transaction volume was 205 million transactions, which represents 38% of OpusCapita’s total transaction volume. Growth was the fastest in the volumes of electronic invoices with a cumulative growth rate of 6%.