Good morning, and welcome to Posti Group's Half Year 2026 Results audiocast. My name is Marja Mäkinen, and I am heading Investor Relations at Posti Group, and I will be your moderator today. Joining me here are our President and CEO, Antti Jääskeläinen, and our CFO, Timo Karppinen. First, Antti will take you through the key highlights of the second quarter. Timo will then review our financial performance in more detail. Following the presentations, we will be happy to take your questions. You can submit questions at any time during the presentation using the chat function on the webcast page. We will address them during the Q&A session. Please note that today's presentation may include forward-looking statements, and we have a disclaimer on the presentation material for that. With that, let's move on to the results presentation. Antti, please go ahead.
Thank you. Thank you, Marja, and good morning, everybody. In Q2 2026, Posti's net sales grew and adjusted EBIT improved. That's the headline, and let's start with some of the highlights. First, on the market environment, consumer confidence did strengthen during the quarter in Finland and in our operating countries. While there are, of course, other geopolitical or uncertainty-related risks still there. The accelerating digitalization continued to have a negative effect on the demand for postal services. For Posti's Q2, our net sales at the group level increased by 1.6% and was EUR 362 million. This is really driven by the growth in e-commerce and delivery services, which had a strong quarter. Parcel volumes went up by 12%, and here we have a more widespread growth of volumes and sales across different kind of parcel and freight services.
Recommerce did continue to be a growth driver as in previous quarters. However, we have sales growth in other areas as well. In total, our growth businesses, the e-commerce and delivery services, as well as the fulfillment and logistics services, they continued to grow their share of the group portfolio. Now the share of these growing businesses is 67% of group sales. Traditional postal services being now 33%. This gradual change in our business portfolio continues. As said, declining the addressed mail volumes had a negative impact on net sales. Our adjusted operating result increased to EUR 12.5 million with the margin improving as well, mainly driven again by the strong e-commerce and delivery services. Like already in Q1, the whole first half operating free cash flow has continued to be strong and increased significantly from the comparison period last year.
We have several actions and progressed in our strategy execution during Q2. We have strengthened our commercial position through many customer wins, contract expansions, and strategic partnership also in the digital side. In April, Posti acquired the Kivra's digital post services in Finland, which strengthens our position in the evolving and developing digital communications, digital postal locker business. The Astra renewal program is progressing as planned. We have, during Q2, launched the new operational unit, Posti Operations, and this took place 1st of June, where 9,000 employees moved to a new unit with new synergistic targets and operations. Some further highlights from the business groups. As said, strong quarter for e-commerce and delivery services, 8.7% net sales growth. Competitiveness has strengthened, and we have also been operationally very efficient. The additional volume has gone through our system with a relatively modest cost increase.
The profitability has improved. As said, recommerce was a growth driver, but our sales grew also in other ECD areas, B2B freight services, and in the traditional B2C e-commerce outside of the recommerce. Also, the customs changes during the summer were successfully implemented without any hassles, as many of you may have noted that the EU customs regulation was changed during the summer. Fulfillment and logistics services business group, there the demand continues to recover slowly, and there is still overcapacity in the market, which puts pressure on the pricing. Despite the continuously challenging market, the segment's net sales did increase. We have, as mentioned in Q1, in the earlier announced, we had a loss of one major customer in Q1. This has been compensated in top line already with winning several new smaller customers.
However, the ramp-up costs and the business mix change their challenges profitability still in the short run. Postal services digitalization continues on a rapid pace, -24%, similarly as in Q1. In addition to the normal digitalization trend, the Finnish government digitalization program, Digi ensin, has contributed to this faster than usual wave of decline. However, we have again improved our cost efficiency, and despite this 24% decline in volume, our profit generation declined only modestly with EUR 1.1 million here. I would say from an operational execution point of view, very strong and cost-efficient quarter in postal as well. Recapping the quarter. Despite the rapid decline in postal volume, we did have 1.6% sales growth at the group level to EUR 362 million, and adjusted EBIT improving to EUR 12.5 million, as said, mainly driven by the e-commerce and delivery services.
Our update on our traditional slide on the industry transformation. Parcel volumes continue to grow and addressed letters have continued to decline. Here the 12% parcel volume growth is still quite high. As you remember, we have in our long-term estimates over several years towards 2030, we have estimated 5% or 6% volume growth in parcel to be the long-term average with the wide mix. We are still above that, and things look quite healthy there. Whether it was 11% in Q4 2025, 14% Q1 2026, and now 12%, I would not draw too much conclusions on these individual percentages. The market is healthy, and we have sales growth with a good business mix, and these are still growth numbers that are higher than our long-term estimate. This is just a reminder of our business portfolio continuing to change as our transformation progresses.
It is a few percentage points every quarter and year as this progresses. But postal services now represents 33% of our group sales and the growing segments 67%. A couple of words on the Astra renewal program. As a reminder, this is to manage our transition from declining letter volumes to growing parcel volumes in our last mile and field operations. This is progressing as planned. As we have said earlier, we aim to deliver EUR 40 million in cost efficiency improvements, EUR 40 million by end of 2029. First savings expected in the second half of this year, and more in 2027, 2028. These will be hitting the ECD and postal services business groups. The new Posti Operations has been launched, and we are quite happy about the progress here. Sustainability efforts continued also.
We have been included for the fifth time in a row in the Financial Times Climate Leaders list, and we are in the process of updating our sustainability program and targets for the future. This is for the good reason that we did reach our earlier set targets early and before the original deadlines already last year. Then I will hand over to Timo for more analysis on our financial results. Over to you, Timo.
All right then. Good morning also from my part. Thank you, Antti, for this. Let's go look into the financial results in more detail. Like I said, in Q2 our net sales increased by 1.6%. This time, the increase really was driven by the really strong performance from the e-commerce and delivery services segment. If you look on the right, this is how by segment, the sales change breached to this Q2 2026 and comparing year-ago level. Like it's visible here, the e-commerce and delivery services really had a strong growth in sales during this quarter, EUR 14 million increase in sales. Behind this is the fact that the volume growth is there and increasing as we speak. As in the quarter alone, the parcel volume growth was 12%.
We have as well had a really strong volume growth outside the e-commerce area. As well, there are positiveness impacting the sales is coming from where the product mix has improved in the quarter. As well, we have been able to widening our customer base and actually winning more customers into these segments. As well, price management is working well and is improving the prices and helps the product mix support in sales as well. Then minor impact, but there is as well some support coming from the market growth itself, as we've been seeing in happening across the market, but definitely impacting our performance here as well somewhat. Then in FLS, fulfillment and logistics services side, some growth in sales. I will go those through in more detail later, but there are some new customers.
Overall, basically, the market within the fulfillment and logistics services side is continue to be at a low level. Then on the postal side, only EUR 8.5 million decline in absolute net sales, which is constitute about 8% of the sales when the volume decline was at 24%. Again, there we can say the price management has been working well in this area. Then with the help of the increase in sales, the adjusted EBIT as well increased for the group. That as well was driven by the strong performance in e-commerce and delivery services side. As you can see on quarter-on-quarter, we now start to have a growth in the profit levels. Here as we can say that the seasonality pattern that we have now used to will be the same this year as it was a year ago.
We were expecting the EBIT levels to continue to grow in the coming quarters starting Q3 next quarter. On the right-hand side is the actual bridge of the absolute improvement in unadjusted EBIT levels. Growth of this close to EUR 1 million in absolute EBIT level is really coming from the e-commerce and delivery services side. Here there are elements that why the improvement is coming is actually the main thing is the operational efficiency continue to be and actually improving. We have 12% volume increases. At the same time, the operational expenses remain low despite the strong volume growth. The product mix improvement itself with the good price management is constituting to the increase in and margin improvement in this segment. As well, of course, the volume growth is the big driver as well bringing the profits here.
On a fulfillment and logistics services area, the profitability or adjusted EBIT level remain flat. On the postal services, it really strong execution on our operation has been working well. Now despite the fact that there is a 24% volume decline and some decline in sales, the adjusted EBIT or the profit level only marginally decreased in the quarter. At the same time, our Operating free cash flow improved significantly. Year to date, this year the Operating free cash flow has now improved by EUR 63 million in total. This is driven by our improvement in management of net working capital and then lower investments. The cash flow from the operating activities improved by EUR 35 million, and here we see the change in the net working capital improved the most, bringing EUR 25 million, or actually EUR 35 million in the cash flow for the year to date this year.
Next part is the investment levels. Here, the purchase of property, et cetera, is the booking of the investment. There we had a EUR 25 million decrease in the year to date so far. Putting these together, the total Operating free cash flow really improved by this EUR 62 million in year to date, which we are extremely satisfied and kind of levels of the improvement that we should be seeing going later this year. As I said, and as we have been saying all along, that we can reduce the kind of investment levels on annual basis compared to what we have had in the past. This is now showing kind of the factual evidence of that. In the first half of this year, our investment or cash flow-based investment reduced by EUR 25 million.
Now we see the strategic project investment that we have been putting into real estate development that is now completed, and we do not see that anymore. As well, the overall investment level is reducing. On the booking-based investment breakdown, as well is now reduced by EUR 25 million from the year-ago level when you are taking account the whole of first half. Then our leverage and net debt position remains strong. The net debt and adjusted EBITDA ratio continue to be and was this 22.6. When you sort of break that down into the financial net debt, that remained to be at a low level. The financial net debt compared to adjusted EBITDA is only 1.1. Here we can say that we should be seeing that this net debt position and leverage should be going down somewhat, going towards the end of the year.
Then we can move on and look into the a bit more closer to the segment levels in Q2. Starting from the eCommerce and Delivery Services segment, kind of repeating what the main positive story of the quarter is that in here, the net sales of that segment improved 8.7%. As well, very strong improvement in adjusted EBIT level, which grew now more than EUR 5 million, up to EUR 10.7 million level, which is now constituting more than 6% adjusted EBIT margin compared to sales. Really both the sales and profitability was driven by the operational execution, higher volumes, and the more favorable product mix. The total number of parcels continued to increase and grow. So close to 12% growth combined was the volume growth, which is, in our case, constitute about 90 million of parcels.
But as well, within the eCommerce and Delivery Services segment, we see now the growth as well, and the sales growing positively. In the B2C, where we take it excluding the recommerce and the B2B and rate services, all of these areas had growth and had impacted the net sales positively in the quarter. Then on the Fulfillment and Logistics Services area, net sales increased a bit, about 1%. Here, when you look at the country split, the net sales in Finland decreased slightly. The main reason for that was on a departure of one big customer. Then on the net sales in Sweden increased. The increase in Sweden continued to be the strong story of us, where we have continued to have customer wins in our case, but have to say that the market demand and overall market remain at the low level.
We had a decrease in adjusted EBIT level and profitability in the quarter on this segment, -EUR 3 million in EBIT level. But here it's mostly related to the fact that we have a transition of our customers. We have new customers coming in, and especially this one big customer moving out. So these are typically impacting negatively when this change is happening in warehouses. Another part of that is this low market itself and over capacity that we see both in Finland and Sweden is actually impacting the overall market and impacting us as well with the pricing pressures, et cetera. In Sweden case, some support came from the favorable exchange rate, but this is only minor, but had a positive impact. Finally on the postal services here, the story really is very positive and where the strong execution in our operation continued.
Here we had, like I said, the volume decrease was 24% in the quarter, but we had only less than 7% decline in sales. Here the pricing management is the key of maintaining that sales levels and the adjusted operating result only decreased marginally by EUR 1 million despite of the very high volume decline. As said, in this segment, we can say the big highlight is the operational efficiency and that supported the profit generation in the postal services. About the guidance for this year, with the help of the strong Q2 support both in sales and profitability, our view for the whole year has not changed, and we can maintain the same guidance for the year as we have had previously.
We are expecting the net sales to be in the range of EUR 1.4 billion-EUR 1.5 billion and adjusted EBIT to be within the range of EUR 63 million-EUR 79 million. No reason to change that. Then just a small recap on the midterm financial targets and the dividend policy. This is only a reminder, and obviously we have no change in here. We continue to support and say the midterm targets remain unchanged, where we see the net sales growth coming up and the adjusted operating result to continue to grow. Then of course, reiterate the dividend policy, which can be maintained with that growth levels as we are now saying for the midterm. That is my part of the financials. If you now-
Thank you, Timo.
Give the takeaways.
Yes, just before wrapping up, before going to the Q&A. We did return to growth in the group sales in Q2. As we target also in the long term for the growth businesses growth to be faster than the decline of postal, we are happy that this happened in Q2. E-commerce delivery services, parcel volume growth, they are really the key growth engines in Q2. Mail volumes continue to decline, but as you see, we have a recipe and strategy to cope with that and mitigate with pricing and operational efficiency, cost efficiency. Free cash flow improved significantly, and we have strong commercial momentum, which is, as Timo mentioned, it is not only volume-driven. We are optimizing our mix and pricing as well. Last but certainly not least, thinking about the future is that we have the Astra renewal program and the joint operations unit started.
This is progressing as planned.
Thank you, Antti and Timo for the presentation. Now we are ready to move into Q&A. Just a reminder, if you would like to ask a question, please send it through a chat function on the audiocast webpage. We have now here a large number of questions. First regarding the ECD, the segment grew clearly stronger than expected in Q2. Has the good momentum continued in Q3?
I can start with that. Somebody is saying that much higher than expected, need to correct that. We are basically more or less going as we have been estimating happening for the quarter and for the year. A bit better result on ECD side, but whether this will continue. There is a kind of momentum behind us, mostly from our own doings and some support from the market. We should be expecting that this similar trend will continue in Q3.
Thank you.
Then next one. You said you saw several major new customer wins during the quarter. Did these affect your cost base or margins in the quarter, or are they expected to have a negative impact on your profitability in H2, or second half of the year?
Maybe I can comment on that. Especially in the warehousing and logistics services side, onboarding a new customer does incur some startup costs and typically the normal profitability is reached after some months or maybe a couple of quarters, since the start of the beginning. Especially in the FLS businesses, there is a startup cost element in there. If we look at the ECD side, for example, winning a new e-commerce customer, less so there. There may be certain IT integration work related, one-off type of cost, but that is less significant.
Thank you. Going forward, sales in FLS in Finland was flat year-on-year. Should the slight positive sentiment in the Finnish economy continue? When do you expect this to be reflected in FLS Finnish business?
Perhaps I'll continue there. We do not yet see a positive momentum in the logistics and warehousing sector, despite some of the more consumer-driven positive news in the Finnish economy. There, the overcapacity and the relatively low fill rates of the contract logistics business similarly in Finland and Sweden, there is still some more growth needed before the market situation would change in the FLS business. It is more slow-moving than some of the other areas.
Continuing with the question. Did underlying sales grow in FLS Finland, and was it adjusted for the loss of one major contract logistics customer?
Underlying sales did grow.
It did compensate the loss of this one major customer. If we are flat in sales, it means that the underlying sales has grown. However, with several smaller customers, a different kind of mix and more startup costs burdening profitability.
Right.
Next question regarding the Astra renewal program. As it proceeds, can you quantify the savings you expect to reach in the second half?
Mm. I think we have been saying this all along. The Astra operations were started to be effective on June 1 this year. And those big savings that are expected to come are during the next three years' time. There will be some savings coming from this, which are in the second half in, I would say, single digit millions levels in the second half. And those are, can say, already in our estimates and in financial estimates for the year.
Thank you.
Single digit millions this second half. Mm.
Do you expect addressed mail volumes to continue declining roughly at the same rate as in first half?
Well, time will tell how long this 24% rate will go. It may not be exactly the same percentage. It might be slightly lower. However, we expect fast, rapid mail volumes to continue still at least for the second half of the year. Reason being that this public sector Digi ensin legislation that came into effect in Finland in the spring, all public sector letter sending organizations could not operationally move into the new systems immediately. So whether it's the healthcare regions or Kela, or tax, or others. Each individual public sector organization does things on their own pace, and a big wave of digitalization has happened during the spring, but we expect many other public sector, for example, in the healthcare sector, to connect themselves to the Suomi.fi service, for example, during the second half.
We don't have an exact number to say, but we expect this faster than usual decline to continue now for some time.
Thank you. Then a question regarding the customer wins. Can you talk a little about what size of customers did you win and in which segments?
Well, Posti obviously has a massive amount of customers in the range of 20,000. So in the SME side, we have a lot of wins and also losses at the same time. Here, we probably refer to the bigger cases in the logistics services side or in the ECD side. We have won trade contracts, e-commerce presence contracts, contract logistics contracts in the warehousing, and one which is public due to the customer being public about it themselves. So we, for example, made an eight-year agreement with CGI, during the quarter, where we have this multichannel messaging solution where we provide both digital messaging and physical letter messaging to the CGI clients. And over the years, our joint effort is to digitalize more and more. And this is public news as CGI has announced this themselves. So those are examples.
Thank you. Then back to FLS. Could you give an update on FLS Sweden capacity situation? You obviously have closed some warehouses, but how about your competitors?
In the market in general, this is public information that there has been exits in the Swedish 3PL space. A very big international company called CEVA exited and closed warehouses in Sweden. It is also public knowledge that PostNord has closed a couple of sites. Bring, the Norwegian actor, has closed sites. There has been exits in the overcapacity-burdened Swedish market. We did, last year also, exit in one site as we have reported. These are actions that the different companies do when there is overcapacity. I would still say that looking at the fill rates and publicly available statistics, there is still overcapacity in the Swedish market, unfortunately.
Right. Then ECD, good performance. Were there any one-off items in e-commerce and delivery services segments, revenue or cost side, or do you think this level is sustainable for upcoming quarters?
Yes. For this segment or the ECD, there were no one-off cost or additions to either sales or cost or profitability. No.
Okay.
This was the kind of operational level that we had in Q2, and like I said, similar trend is expected to continue.
Regarding ECD operations, when do you think that self-service points will improve C2C packages cost efficiency in a way that it would be visible in numbers?
Well, during this year, it comes gradually. As we said last time that we launched this locker-to-locker sending and self-service, and we have been rolling them out. We have still work to do to reach this 600 automats that was the plan for this year. I think the sending from automated in recommerce at the moment is somewhere around 20% plus. Between 20% and 30% are now going already in self-service. There is room to improve there, and our rollout is ongoing.
Thanks.
Yeah. They are gradually start to be visible in the margin levels, and should be doing so in the coming quarters.
Yeah. Thank you. Then a question regarding Finnish economy. What is your overall view on Finnish economic state at the moment? Do you see increase in bids and customer activity in more cyclical businesses?
Well, maybe I can start. On the more consumer-driven, excuse me, I have a bit of a summer cold, so sorry about that. We do see, especially in the consumer-related businesses, some pickup. Official statistics, of course, they are better forecasters of the Finnish economy than what we are. But for example, the Association of Finnish Retailers, this Kaupan liitto, they published their estimate that the Finnish retail would grow 3.3%, or has grown in first half, and the full year growth would be somewhere between 2% and 3%. In general, we can see the same thing, that there is a pickup in this consumer-related demand in the single-digit side. Our growth has been faster than that, and we believe we have been winning in the commercial side. Where we don't see yet this kind of pickup is more, for example, in the warehousing and logistics services demand.
The different industry sectors that we serve, there's a mixed picture.
Thank you. Then a question written on the M&A side. I know that Venipak was bought by DHL. Was Posti interested in this asset? Was this maybe part of the special items in the quarter? What implications do you think this transaction will have on you from a competition perspective?
Of course, we do not comment on any of the M&A activities or targets that has been. Venipak is one of the players in the Baltics which we look into, but I cannot comment whether we were involved in that. Now that it was bought by DHL, we think that will have a positive impact on the market overall. DHL being perhaps more longer-term play and with strong background, it should be making the market itself more healthier than it was.
Thank you. Then jumping into OmaPosti. Please remind us how much is OmaPosti roughly in sales and what is your internal ambition sales level in the long run?
Well, we have not disclosed our revenue generation from our digital services. We have several digital services in the company. Some of them are related to this multi-channel messaging and doing either electronic or mail invoicing for customers. Our digital revenues are, in total, bigger than the OmaPosti revenues. However, the future growth naturally would be more expected on the OmaPosti side. I would say that today, this is a small business. Let us say a handful of millions, but we will then, of course, try to develop it to be bigger.
Good. Thank you. Then FLS question. Do you expect fulfillment and logistics sales to grow in latter half of this year, and Finland and Sweden separately?
I guess if the question expected to grow compared to what it was a year ago. I think that what was happening in Q2 and actually in the first half, we see that some positive happening in the sales. We could expect some growth in terms of sales in the second half as well. But like Antti is saying, the market conditions will definitely remain weak and challenging in the market overall.
Thanks. At the moment, the next one is the last question. If you still have some questions, just send those through a chat function on the audiocast webpage. What was the price-related net sales growth in ECD segment in second quarter, while volume growth was this 12%?
Well, maybe we do not have an exact number of that, but from the report we can, of course, piece it a little bit. 12% parcel volume growth, and we have to remember that there are other services than parcel deliveries in ECD, for example, freight and some other distribution services. 12% parcel growth, 8.7% sales growth. In the parcel growth in general, our mix and price management segment by segment has been taking prices up in the last 12 months. In several segments, especially in the B2B freight, these places, we have higher sales growth figures versus the volume growth figures. Our price and mix management has been successful on top of the volume growth that is there.
Good. Thank you. It looks like there are no further questions, and we will now conclude the Q&A session. Thank you for all your questions and for joining us today. Thanks to our presenters as well. Posti Q3 results will be published on October 29th. We look forward to seeing you then. Now have a nice weekend. Thank you.