Good morning, and welcome to Posti Group's January-September 2026 results audiocast. My name is Marja Mäkinen, and I am heading Investor Relations at Posti Group. 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 third quarter, and Timo will then review our financial performance in more detail. Following the presentations, we will be happy to answer 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 section. 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 to the results presentation. Antti, please go ahead.
Thank you, Marja, and good morning to everybody. In Q3, Posti's growth continued, and we improved our profits. Regarding the market environment, there is this partial recovery in consumer demand, which is most visible in the growth of our parcel volumes and delivery volumes in the eCD business group. The Fulfillment and Logistics Services market situation remained challenging. There is still overcapacity and pricing pressure in the market. Regarding the digitalization of traditional mail products, the structural decline in addressed letter volumes continued, reaching 25.9% volume decline, which is obviously historically and internationally a high decline number. There are signs of economic activity continuing to improve, although at the same time, the geopolitical tensions, interest rates, fuel, energy prices, bring uncertainties to the rest of the year.
Posti's Q3 net sales increased by 2.4%, and our adjusted EBIT also increased to EUR 20.1 million, driven by the strong performance in the eCommerce and Delivery Services. Parcel volumes were up 14.2%, and the adjusted EBIT more than doubled in the eCD business during the quarter. Fulfillment and Logistics Services, there we had a positive EBIT result in this seasonally strong quarter, also reflecting our several sales and profit improvement activities, which continue and are ongoing in the FLS segment. Postal Services, despite the very high level of digitalization, maintained strong operational execution with 7.1% EBIT. Which of course, both in absolute and relative terms, is a decline from last year. But even with this kind of volume decline in the mail volumes, we can partially mitigate it in a controlled way. Commercial activity remained strong during the quarter.
We have a strong sales pipeline in our B2B businesses, and we have very active sales efforts and new contracts and a healthy pipeline are continuing to develop positively. Our business portfolio continues to change towards our growth businesses in parcel logistics and digital services. The Astra renewal program is progressing well as planned, and we see already the positive impact already in the Q3 result. Obviously, the synergy benefits more to come in the future years. Some of the business highlights continuing from what I said earlier. The eCommerce and Delivery Services double-digit growth. This is very strong growth historically in this business. The 8.7% EBIT margin in Q3 is the highest relative profitability we have ever had in the eCommerce and Delivery Services. So a very strong quarter for eCD.
Fulfillment and Logistics Services, we were able to grow net sales, especially in Sweden, but also in Finland. As we have reported earlier, we had in Q1 this year the loss of a major customer. We have been able to, with other businesses, new sales to compensate that, and measures to improve profitability continued and will continue in this segment where the market situation is still challenging. Postal Services, as said, we are continuing with our strategy of product changes, price increases, and operational efficiency improvements, including the Astra program, where we can then partially mitigate the fast decline in mail volumes, resulting in still strong profitability.
Some of the key figures in the quarter, as said, the net sales growth for the group accelerated to 2.4% from already growing quarter of Q2, and then our both relative profitability and the absolute adjusted and reported EBIT grew from last year. Here is just an illustration of the historical trends, where we can see the trends accelerating this year. Parcel growth is strong now back to 14% here. Like in the previous quarter, the positive thing on the eCD growth and parcel growth is that it is broad-based. We do have growth in re-commerce, as we have had earlier, but also the B2C volumes outside of re-commerce are growing in a very healthy way, as well as our sales growth in the B2B and freight side in eCD. In that sense, we have broad-based growth there.
The government digitalization program this year has been accelerating the underlying digitalization trend in the postal side. With these changes and with this development, our business portfolio continues to transform as it has transformed in the previous years and quarters. Now, the Q3 ended up being 70/30, 70% of Posti Group sales coming already from the growing sectors of eCommerce and Delivery Services and Fulfillment and Logistics Services, and 30% coming from our Postal Services. Astra renewal program. This is progressing as planned. As you remember, we launched this in the spring and the new Posti Operations unit where the last mile of delivery is combined for postal and eCD.
This unit is fully operational after the June start, and the program is already delivering first cost savings visible in the Q3 result and improving the cost efficiency there, and further financial benefits to materialize gradually as the program progresses. As a reminder, our aim is to deliver this EUR 40 million in cost efficiency improvements by the end of 2029, and the savings land into the eCD and Postal Services. Some highlights of our sustainability leadership progress. We were the first and currently the only parcel operator having qualified for the Nordic Swan Ecolabel in our markets on the parcel side. Then we renewed our EcoVadis Gold certificate with the highest scoring we have had, improving in three categories. As you know well, the criteria for the EcoVadis is getting tougher every year. So good results for Posti in the sustainability work.
At this point, I will hand over to Timo for the review of our financial results.
Okay, good morning also from my part. Q3 was, like Antti said, very strong in all fronts, whether it is the sales or EBIT generation. In Q2, the net sales increase is 2.4%. This increase is really driven by the eCommerce and Delivery Services. Right now, the sales growth is excluding the Postal Services is already close to 9%, and that represents the 70% of the sales for the group in total. Like you see in quarterly, we have now systematically had a sales growth compared to the last year quarters. Looking into more detail on where this sales sort of changes is coming through and starting with the eCommerce and Delivery Services, they are very strong sales growth of more than 10% compared to a year ago. This is close to EUR 17 million in value growth.
Behind that really is the volume increase in the parcels, more than 14%. Here as well, the mix is now improving. We see strong growth as well in normal consumer parcels excluding the re-commerce, close to 10% as well over there. We clearly see the parcel market recovery in terms of eCommerce volumes. As well, we have had really good success in all commercial activities around here, and we strongly believe that our market share is now increasing in the market, and we have a strong momentum, whether it is consumer parcels or B2B area in eCD representing, as we said, probably market share increases as well. On the Fulfillment and Logistics Services there as well, we start having the recovery in sales and success in attaining new customers and increasing the volumes in existing customer base.
This is especially in Sweden, where we saw a sales growth coming through. On the Postal Services side, big volume decline a bit higher than we were expecting, 26%. This is the normal trend seem to be now coming through all this year. At the same time, we can mitigate that by product changes and price increases, which then limit the value declines all in all. EUR 10 million coming decrease in that area. Moving on to this adjusted EBIT increase, which is then really strong, as we have been saying. The adjusted EBIT itself grew by EUR 3 million compared to last year, and then the relative profitability improved as well up to 5.7% of sales. This has been the ongoing trend throughout this year in the quarters to go.
Q3 is the second most strongest quarter that we have in the year. I am really pleased the way we were able to execute this quarter all in all. Looking at then where the EBIT growth is coming through, the eCD here is the strongest in generating that, so close to EUR 8 million improvement in EBIT level. This is the total profits coming out from eCommerce or eCD side is then highest that we have had ever in eCD in one quarter, as well, the relative profitability of that. Behind that really is the sales growth that brings the profit. At the same time, sales growth is driven by the volume growth, but we have now as well improved the way we can the operations run around increasing volumes and our scalability really works.
Despite of the volume growth, we can maintain the operational cost in a good level. Some addition as well, we are talking about this Astra project saving of limiting the cost of our distribution and combining those with the postal and parcel delivery. Now we start to seeing that project savings already coming through and actually bringing the savings, which then improves the profitability in this quarter and mostly going into the eCD side. Then on the, what we are as well quite happy about is the Fulfillment and Logistics Services business segment where we are. This quarter was that they turn into profitable, although it was a bit behind on the last year level. But clearly our actions around making the profit improvements in FLS start to be working and successful in that front.
On the Postal side, despite of the really high volume decrease, we able to maintain the profit level good. Here we can say that in the operational activities around Postal continue to be strong. Although we are now seeing the levels of volume decrease in such a level that we cannot fully offset all the sales value decreases totally in the EBIT generation. But anyway continue to be in a good level. As said, this Astra project is done especially for this reason that we are now seeing the postal volume decrease at the same time when the parcel volumes is increasing, where we can combine these operations or deliveries in these two segments. It is bringing the cost savings and profit improvements in here. But all in all, a really strong quarter, and with the increases in EBIT as well as net profit.
We doubled our net profit this quarter to EUR 10 million from the EUR 5 million level we did a year ago. Then when the results are improving, our operative free cash flow is improving as well. This is something what we have been saying what we can do in this business, and now it is very visible in the cash flow generation. This year, all in all, our operative cash flow improved more than EUR 73 million year-to-date so far. It is really coming from the improved results and then the net working capital improvement and having the lower investments compared to a year ago level. So the result improved, brought by EUR 10 million more of cash flow. Then the change in the net working capital provided EUR 30 million improvement in the cash flow. Then the investment level was down by EUR 30 million.
Putting all that together, it is more than EUR 70 million cash flow improvement in three quarters' time, which is a significant improvement compared to what we did a year ago. On the investments, as we have been saying, we can decrease the investment level that we have had in the past. Now we do not have any more of the strategic project investments that have been done for the warehouse build. As well, the operational investments can be reduced. This year, on the left-hand side, the cash out investment level is EUR 10 million less than it was a year ago. On the right-hand side are the booked investments all in all. We have now year-to-date, more than EUR 30 million less investments than we did a year ago.
The investments that we do are really focusing on improving the delivery efficiencies in operations and improving the customer experience and the self-service levels in the parcel sending and receiving. On our leverage, there is improvement and not material changes. We remain at this good level of 2.5x net debt to adjusted EBIT, where mostly it is coming from these lease liabilities and our financial net debt is only 1.1x compared to adjusted EBITDA . Move on to a bit closer look on the segment level results, and starting from the eCommerce and Delivery Services. As I said earlier, it was a really strong quarter. Trend-wise, this is following what we already saw in Q2. Here, the sales improvement was 10.5%, which is really driven by the higher volumes in the parcel volumes. All in all, it was very strong commercial execution.
As I said as well, the volumes are growing on the consumer side as well outside the eCommerce strongly. With the help of this, the mix has improved. All that generates now more sales than we did a year ago. Trend-wise, it is a strong momentum as we have. This is all then coming through as a profit. Adjusted EBIT more than doubled from last year level to EUR 15.3 million. As I said, growing in the record level of relative profitability is 8.7%, which is, as I said, at the level where we have not been in the previous quarters in the history of eCommerce and Delivery Services.
Of course, with the help of that, it is not only from the sales, but as I said, the very strong operational performance to deliver and execute this high volume growth. On the Fulfillment and Logistics Services side, sales increased 2.9%. As I said, mostly it is coming from Sweden, where the sales increase was one of the record highs as well, 10.5% in that quarter. It really is a good result in this segment given that there are quite a lot of uncertainty in the market, overcapacity in the market, and slow market recovery continues. We have now been able to succeed in that market environment, and it is coming from new contracts and new customers in customer logistics, and as well on other services that we provide in Sweden and as well in Finland.
Finland, we had one big customer loss, which is then kind of compensated by being able to get more customers in during this year and now focusing in this quarter. As well, what we are really positive and happy about is the profitability. Now, this segment made losses in the first two quarters of the year, and now this quarter, we turned into profitable, which is then supporting the fact that what we have been saying all along, that our main focus on this segment is to be able to start generating profit and turn the segment itself into profitable. These are showing that these measures that we have taken are bringing the results. On the Postal Services side, key point is that the volume decreases continue at a high level, close to 26% decline.
It is really driven by the digitalization acceleration in the Finnish market. Of course, that volume decline had a negative impact on the sales. If the volume decline was 26%, the sales decline was only 9%, so that relatively is good result and shows our capacity to do product changes and price increases, et cetera, and commercial actions are bringing the results over there. On the adjusted EBIT level here, as well, the good level, EUR 7.6 million, a bit close to EUR 3 million decline from the last year level. Now we can say that we cannot really compensate all of the volume losses or sales losses fully. As well, the profit levels are in a good level.
Now we can say that this Astra program that we have been put in place are really addressing especially this issue that when the volumes are decreasing here, the parcels are increasing elsewhere. In total, we can bring savings and cost efficiencies into our deliveries, which are supporting the Postal Services EBIT. Moving on to talk about our guidance. We have not changed the guidance for the year that we have had before. We are expecting the net sales to be in this range of EUR 1.4 billion -EUR 1.5 billion and adjusted EBIT to be in the level of EUR 63 million -EUR 79 million. All this year and how we see the rest of the year to go is going pretty much as per we have been estimating.
40% of the EBIT of the year is coming from the Q4, and our visibility really for the high season is low. We can say that on eCommerce side, we continue to have strong momentum there, but at the same time, on the postal side, this lower volume decrease level will potentially continue to be the same as what we have had throughout the year. But we are very strong confidence to maintain this guidance for the year. Finally, just a few word or reminder of our midterm financial targets are here. Q3 is kind of showing the fact that the way we've been saying our midterm results are developing. In Q3 we did more than 2%, we did 8% of our sales outside the Postal Services. Actually, the adjusted EBIT growth was really more than 5% for the group.
These are, of course, no changes in the midterm targets. But we strongly believe that these will hold as we go the next few years. Antti, will you go through the—
Yes—
—key takeaways?
—Q&A. Just to summarize. Our profitable growth continued in Q3, really driven by the eCommerce and Delivery Services, which had a record high profitability and double-digit growth. In the FLS segment, we managed to deliver a positive adjusted EBIT result due to our own efforts, but also in a seasonally strong quarter. Overall, our commercial activity continues to be strong. We have a lot of pipeline for new customer cases, and our business portfolio continues to transform. In this quarter being the 70/30 split between Postal Services and the growing sectors. Astra renewal program is progressing as planned, and we see the first positive results already in the Q3 results. As Timo showed, our balance sheet cash flow financial position remained strong.
Thank you, Antti and Timo, for the presentations. Now we will move to Q&A section. Just a reminder for you who are participating online. If you would like to ask a question, please send it through a chat function on the audiocast webpage. Now let's move to questions. First, can you break down what products typically drive your Christmas sales in the postal and e-com segments? In which products are you cautious that potentially lower consumer confidence might impact demand?
Well, typically we, of course I guess the important thing in this question that what are the peaking volumes, and it is the consumer parcels, eCommerce parcels, and then the Christmas cards in the Postal Services side. These are the main drivers there. Re-commerce is actually not typically peaking around Christmas season. It is the traditional eCommerce and then Christmas cards. Overall consumer confidence does have an impact. Then the Christmas card sales is partially driven by the digitalization trends, but typically in previous years, the decline of Christmas cards volumes has been smaller than in the other general mail segments.
Thank you. Next one. Should we expect addressed letter volumes and therefore sales in Postal Services to continue to decline at similar pace as in Q3?
Well, we of course, don't have order book or similar there. It is so-called hand-to-mouth business. Overall, yes, we do expect similar fast decline in Postal Services in the near future as well. No change in our view on that.
Thank you. Next one also in Postal Services. Was the profitability in that segment a disappointment against your internal expectations, and how do you plan to improve margins in fourth quarter?
No, not at all. It is growing as we have been planning and estimating. We are being prepared for this volume decline all along throughout this year. Like I said, there are several things that are impacting that positively. Our automation level in the sorting starts to be close to 100%. Our deliveries, we can make that more efficient as we go. It is now highly scalable operation. Even the volumes are declining, we can sort of make the efficiencies coming through still in Postal Operations. Like I said, this Astra program that is really addressing exactly this point, that when the postal volumes are declining, we can compensate that by bringing more of the parcel volumes into the same networks. We can address this delivery cost all in all, which then is also supporting the postal profit generation.
We did 7% in EBIT margin in Postal, is according to our estimation and actually is a strong level in all in all. To be able to do that. Going forward, we have no reason to believe that it would change.
Thank you. Now we have one further question. Now it is a good time to send your questions if you have any additional ones. Next, regarding the market environment and regarding our cautious on Q4 and peak season, is it based on what you see in the market or more on recent consumer confidence measurements?
Well, it's a kind of holistic assessment. But as we say in the report, we have some uncertainty in the visibility to the peak season. As you know, and I think it's part of the question, that the consumer confidence has declined in September and October in Finland. This may have an impact to the Christmas season sale. We then have also some other signals which are perhaps somewhat mixed, some positive, some negatives. But what we see, for example, in our warehouses in contract logistics is only a small portion of the Christmas season sale, but we don't see any dramatic improvements, for example, compared to last year or something like that. But I emphasize that we don't have the full visibility, and that's the reason behind our statement.
Thank you. Now 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, and thank you also to our presenters. Next one, it will be our financial statements bulletin and Q4 results on February 19th, 2027. We look forward having you joining us then. Thank you and have a good day.
Thank you.