Welcome to Posti Group Q1 2026 results news conference. My name is Marja Mäkinen, and I'm heading Posti Group's Investor Relations, and I'll be your moderator here today.

Joining me here are our President and CEO, Antti Jääskeläinen, and our CFO, Timo Karppinen. First, Antti will walk you through some of the highlights from Q1, and then Timo will take you through the 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 presentations using the chat function on the webcast page, and we will address them in the latter part in Q&A section.

Please note that this presentation may include forward-looking statements that are dependent on future events, and you can find the related disclaimer in the presentation. With that, let's move on to the result presentation.

Please, Antti.

Thank you, Marja, and good morning to everybody. I'll start with the highlights.

In Q1, this went as we expected. The market changes that we have seen and anticipated for many years and during last year continued, and they continued to accelerate.

Then in Posti, we continued to transform the company and become even more efficient. The Finland's Digital First legislation in the public sector mail sending did come into force actually in April, but many actors, of course, started to adjust their sendings already in anticipation of this.

We did see an accelerated decline of postal volumes, -24% in addressed letter volumes in Q1. At the same time in the market, we saw also an acceleration in the parcel volumes.

This is very positive development, +14%, driven by the consumer re-commerce, not by the B2B parcel. Also there is economic uncertainty, the geopolitical tensions, oil price or energy markets, general uncertainty in the market.

If we look at the Posti's Q1, we do have a slight sales decrease, 1.3% sales decline, which we have to put into the context of this market environment, relatively modest. Both are growth businesses, the eCommerce and Delivery Services and the fulfillment and logistics services segments, these continue to grow compared to the year before, and their combined net sales rose to over 64% of group sales.

Then as you remember from my earlier reporting, Q1 is our seasonally weakest quarter, even more so nowadays when the traditional Q1 mailings of postal items to citizens have been largely digitized, we have a adjusted operative EBIT of €6.5 million, somewhat down from the previous year. Then when it comes to net profit and EPS, where we have an increase.

Here also the impact is from the first sale of our investment properties that was completed in Q1. As you remember, we have the let's say large fleet of real estate properties where the divestment program will take several years, but the first part took place now.

The operative free cash flow was very strong and increased significantly even before this real estate sales, we have working capital and EBITDA-related strong free cash flow improvement. On the key actions, I'll go through a little bit in more detail, but we have been continuing our commercial excellence efforts, and we won several new customer contracts during Q1, and we continue to strengthen our position as the leading logistics partner in Finland.

Synergy seeking, I'll also come back to this, but we launched the acceleration of our existing strategy of being more operationally efficient in our delivery networks. Now we are preparing to merge our Finnish postal and ECD delivery networks into one entity where we believe there's plenty of improvement and synergy potential.

We have a target of €40 million cost-efficiency improvement by '29. Also the so-called first mile of our B2C re-commerce side, we have a big development in the self-service points, which we developed and piloted during Q1, and have now made the official launch, and roll out is ongoing.

As you remember, regarding the changing parcel volume mix, making the end-to-end chain and the first mile efficiency of B2C re-commerce is very important for our customer satisfaction, but also for cost efficiency, and now we have progress here. Moving on to the market, I did mention this already, but if we take a look on the graphical illustration of these existing trends, so as said, the parcel volume growth has accelerated.

This is really driven by the re-commerce or the second-hand shopping market. The B2B parcel volumes remained flat, and then the addressed letter volume has declined relatively sharply.

Overall, digitization continues, but now this public sector legislation change is really a driver here in the mail side. Maybe another point to remember is that in the comparison period we did have election sendings or mailings regarding the municipal elections.

Another point regarding the letter decline is that when projecting forward, we can only, of course, lose a letter once. If a public sector letter of a certain authority has been digitized in the following years, it will not anymore be impacting the decline percent.

Transformation is fast, and so Posti continues to adapt. On the portfolio side, our transformation is reflected in these portfolio weights.

Now we have 64% of our group sales in Q1, up from 62% last year in these growing sectors, and the share of postal services is now currently 36%. Then a few highlights on some of the key operational and market developments.

Regarding the synergy initiative and our program that was launched in March, here, as said, we have done synergy and efficiency work in Posti also earlier, and we have been taking actions during 2025, and we have piloted this combination of postal and parcel networks in six six cities or six areas in '25. Based on the good learnings and experience there, we have now decided to accelerate this operational efficiency and synergy, and we are in the process of merging our Finnish postal and parcel distribution networks into one entity under one leadership.

We have a holistic program aimed at strengthening the synergies between businesses. This will be a multiyear program consisting of many activities, and it will also include important support functions with a big cost impact where the production, sourcing, real estate development, and ICT and digitalization will be part of this new efficient machine.

We are targeting €40 million improvement in cost efficiency by '29. There's also other benefits: operational efficiency and better capital utilization.

We believe that once we have synergistic road maps for our capital and real estate road maps, there's potentially additional CAPEX avoidance-type of benefits, but these are not calculated in the target number. Right now, we are conducting the appropriate changes in change negotiations with the concerned people, and once those appropriately done, then we hope to launch this new operative unit during Q2 organizationally, and in parallel, we are of course continuing and taking action already during this year regarding these distribution synergies.

However, the full impact of the program comes in the later years. Another area, which is not strictly related to Q1, but I want to highlight it, is that productivity gains, digitalization, data, artificial intelligence, they are part of this efficiency development and part of our development as Posti, good to mention this as well.

We are a data-rich and transaction-heavy business, we are quite the fertile ground for efficiency development when it comes to digitalization and AI, and one of the reasons why these activities also part of the new unit. Already today, we have more than 10,000 people every day in routes, and with daily capacity planning, which are utilizing optimization with intelligent routing and AI.

We have close to 100%, 96% forecast accuracy with the new tools and AI on our parcel locker pick up forecasting, which is really valuable information when we do our routing, and also has a customer satisfaction angle. We have 66% of first contact resolution by AI in our customer services today, which has led to relatively significant cost savings already.

Our several thousand service points networks where we make changes all the time and add points, here the decision-making is very much AI- and intelligence-driven. We have a systematic scaling in AI and technologies in Posti, and we take a humble approach here that there's much to learn, but we are a fertile ground for this, and we are business-case driven, there's always some room in big company for some learning and exploration, but we are starting to be beyond that, that whether it's customer service or routing or service point networks, we are business-case driven, and the results accountable people have them in their targets and budget, to say, already, and we continue to develop.

Then a third point is this rollout of new self-service points. This is an important development regarding the first mile of our growing B2C re-commerce business.

As our parcel mix is changing, growth coming from the B2C re-commerce side mainly and less growth in the B2B side. Even though we, of course, expect in the long term also the B2- B2B side to grow somewhat, this trend will probably continue in the future.

As the difference between these value chains between B2B and consumer re-commerce, the difference is in the first mile. Currently, the first mile and receiving of parcels has been happening through our partner network, which is a relatively labor-intensive activity and generates also some costs.

Now we have launched the self-service terminals, self-printing of labels, and we have piloted this in Q1, and now we are expanding to basically hundreds of locations during this year, continue to expand. First reactions from customers and the market has been very positive, and we can additionally, of course, send from parcel locker to parcel locker using our OmaPosti application.

Then on the sustainability side, we continue to make progress in our sustainability efforts, and here maybe regarding the safety side, we have again 13% improvement or reduction in the accident frequency compared to last year. This is, of course, extremely important for our people and for our labor-intensive operations, but this is also in the end also a improves cost efficiency.

Then we have initiated the upgrade of our SBTi target setting during this year on the back of our good progress regarding the earlier targets. Posti did set a target of reducing 50% emissions by 2030, and as it happens, we did reach this target early and already last year.

These are the operational highlights during Q1, lot of things ongoing on our market, customer service, and in our operational efficiency side. At this point, I would like to hand over to Timo for our financial results.

Hey, good morning also from from my part. Let's go through on the the the key financial results that we had for for the for the Q1.

Starting from the the net sales, our net sales decreased so-called slightly, 1.3% from the last year level. We ended up in a strong €353 million kind of sales level, and as this kind of follows then the the new norm seasonality that we have for quarters, they they normalized.

Parcels was only single-digit growth, but actually then the growth is coming from the from the from the consumer side, from the re-commerce volumes, and then some some growth in in our freight business. Then on the fulfillment and logistics areas as well, very well, continue to be weak market, but the gains here are coming from from the from our gaining of the new customers, and then as well, some of the in-house logistic area growth that we are seeing through the new customers.

The the largest kind of decline in the sales is coming from the postal services, where it is as we have expected, the the volume decline was 24%, and then which is mainly coming from the digitalization trend, that is now kind of starting in in a government side, and then as well, there was an election on the on comparing quarter last year, which was not in this quarter, which contributes something like 4%, 5% of the volume volume loss. As as said, very much as expected and in our estimation for the for the quarter of getting the sales of this €353 million.

Then moving on to the the the profit side, the adjusted EBIT decreased to €6.5 million and now representing close to 2% of the net sales, decline of this close to €4 €4 million of last year level. Again, this is very much in line with our expectation.

Quarter 1 is typically then the weakest quarter in in in in the year, and it's a result of that is is basically coming from that the Q4 is the the strongest and and the volumes and and the commercial activities are the highest in Q4. Therefore, the Q1 typically is is then the lowest and and as well, the volumes are typically low during there.

The the and when looking at the seasonality coming through, we we can say that in the seasonality this year will follow the same pattern as it has been in the last year, and now nowadays a trend of of way we are how we contribute the the profits. Then looking at the kind of operating results change by segment, we can say in in in starting with the with eCommerce and Delivery Services, there really the key is that they they, like said, on on the B2B side, very weak volume trend, but then the main main growth in sales is coming from this re-commerce side, which is impacting our our sales mix, and then as well, increase in the the operational activities such that it there is an minor negativeness in in Q1, which we then expect to to improve as we go on throughout the year, where the sales increase price increases will come into play starting Q2, and as well kind of operational efficiency improvements will start coming into play, and one of those was what what Antti mentioned earlier in re-commerce, this self-serving point in in in the first-mile sending.

Then on the Fulfillment and Logistics Services, really was impacted mostly on the the fact that this the market being very slow, and then therefore impacting the the fill rates in our warehouses, which then trend-wise is is increasing some some more cost into the operation. As well, we had an loss of one customer, big customer in Finland, and then, but as well, same time, were able to add more customers both in Sweden and in Finland.

These changes typically impact more cost when we do the changes in the warehouses, and therefore increasing the cost, which impact profits. We are extremely positive about the the Postal Services operating result.

When the sales decline more than €11 million, but the EBIT level only less than €2 million, where that the kind of profitability level has remained the same as it was year ago, and then therefore contributing now very strongly into the overall our profits. What we can then say and the coming quarters there are we should be seeing this improvements in in in EBIT levels quarter-by-quarter.

Clearly, like said, both in postal and and parcel side, the the price increases start having full quarter effects. Then on the operations side, we can now gear up and and gain further efficiencies, which start impacting already Q2, but more towards the Q the end of the year, and as well with this synergy exercise project that we have really comes and will bring most of the benefits for this year towards the end of the year in the second half.

Then on the cash flow, like said, the operative free cash flow improved significantly. The operative free cash flow change and improvement was €30 million, which is actually per per quarter, which is actually one of the highest improvements in in absolute value-wise that we have had for years.

The the the result for the period increased to €6.5 million from from negative level last year. Actually, the the biggest gains are are coming from the change in in the net working capital, €20 million improvement in in in that area.

There there really is an improvement coming from the the way we now manage the sales receivables, and then continuous gains that we get from the our payables area, and and which is now bringing the good results on in in in total into the net working capital area, and we are expecting that to to continue as well during the year. Then on the the operative free cash flow, as said, then increased the €30 million, and the remaining €10 million is coming from the from the lower investments that we have now done in the Q1 compared to what we did the previous year.

As as well, we now in in first quarter, we sold the first of our investment properties, and the proceeds of that sale is visible in in the result, but not in here in the free free cash flow results, the proceeds from that sales is actually coming on top of the cash flow report that we are showing here. The investments are decreasing as we have been estimating and planning.

Now in the cash flow-based investments, which is the main measure that we follow, decreased from the last year level more than €10 million. Now, all in all, it's about €27 million in in the first quarter.

Now clearly, the the the investments, what we call strategic investments, which goes into the building a new new warehouse for FLS in in Järvenpää and then in Baltics in Tallinn, is now over. Those are completed, and you will not see anymore this kind of strategic type of investment in in in in this year.

Then as well, the the kind of operative investment itself where and we can keep them at lower level in in Q1, and then we really focusing only on the parcel locker expansion, and then ICT-related project. Investments at low at the low level, and here we can continue to to to say that the cash-based investments on a yearly level is is continue to be predictable and around at €120 million level on on for the year.

Then on the investment breakdown, like said, compared to last year same level, more than €10 million reduction in in investments, and it's an these are in seen in this addition to property line, which was mostly related into that that strategic investment that we had year ago. Our net debt to adjusted EBITDA ratio continued to be at the same level, now at 2.6, around at the at the say at the level of what our long-term target is.

In in in terms of the leverage, the net debt position, really the the majority part of the leverage is coming from the from the lease liabilities, and only minor part is coming from the financial net debt. The financial net debt continued to be at the at the level one, net debt to adjusted EBITDA ratio.

Like said, the majority part are are on a lease liabilities, and we had some additions in in Q1 into lease liabilities when we extended a a one warehouse in in in Finland. Then we can move on to the the the results on the segment level a bit more detail from what I explained earlier.

Starting with the eCommerce and Delivery Services in in in Q1, the sales increased by by 3%. This is really driven by the re-commerce, and the that which then increased the total number of parcels delivered by us in Finland and Baltics to 14 and .4% level, increase from less than 2% in in growth in in the last year.

Like said, there is an the only a single-digit growth in in normal consumer parcels, and then no growth in in on the B2B parcels, but this is driven by the the re-commerce, all in all. As well then on the the freight business had a net sales increase in Q1, which then impacted the kind of segment sales positively.

We see that trend then now to continue when this spring activities are coming into play in in freight business in during the the Q2. Then then the profitability was slightly impacted by the the higher cost of providing these services, which then is result from this parcel mix parcel product mix in in in Q1.

Like said earlier, we we except expect that trend to to to change in starting in Q2 and then the rest of the year with the fact that the there are price increases coming into play, and then the activities where we can improve the overall profitability in the in in the parcel and ECD business, all in all. Then on on Fulfillment and Logistics Services, net sales increase of 1.8%, coming from on Finland is 1.5% where we the increase is mostly most coming from the new new customer acquisition, and which are main part is coming from the in-house logistics.

Then on the on FLS Sweden, net sales increase was 2 2.5%. Then in in Sweden, it is really driven by the improved improved demand in contract logistics, despite that the market overall continued to be quite weak in in in Sweden.

Then the decrease, there was a decrease in in the profitability of €4 million in in total, just roughly about €1 million more than it was year ago, is primarily due to to lower utilization rate that we have in the warehouses, which is result from the weak market environment, all in all. In Postal Services, the the like said earlier, the the volume decrease was 24%, coming out from the digitalization trend, acceleration, which impacted the sales negatively, but as well on the the fact that the election was not happening in Q1.

All of that is kind of going as we have been expecting, but we've been already able to to offset this by by price increases. If the volumes decreased by 24%, the sales only 8%, they they it's a product mix, and then as well, the the price increases impacting here.

The full price increases are coming into play in in starting fully in in Q2 and then later on on the year. What we are really proud of and and and happy about is the at the profit level, the the adjusted operating result result was close to €16 million, minor decrease from the last year level.

Overall, the profitability of the the Postal Services segment remained intact. In relative terms, this is now coming from the fact that we can continue to improve the production efficiency, improve the delivery models, optimization in resources, and then utilizing the high level of the sorting automation, which then supports the profitability for the segment.

Then then like said, the profitability only declined slightly, which highlight the the operational efficiency and the strong profitability generation that we have in the the in the Postal Services. Then talking about the guidance for the for the year and the midterm financial targets.

The guidance for as we we gave in in a in a previous result announcement, remain guidance remains unchanged. We are expecting the net sales to be in the range of €1.4 to €1.5 billion, and adjusted EBIT to to €63 to €79 million for for the whole calendar year.

I explain explained earlier, the the Q1 was the the kind of weak start of the year, but we are strongly expecting the the the whole-year results to to to improve and reach the the guidance that we have given. Midterm tar- midterm financial targets have just to recap here, of course, have not changed, and we're keeping the same.

This is then contributing to the fact that the net sales growth is in a 3- to 5-year period is at least 2% group level and 5% outside Postal Services, and adjusted operating result over 5% increase in in 3- to 5-year period on average going forward, and net debt to adjusted EBITDA less than 2.5. Of course, the the ordinary dividends payout ratio of at least 60% is the fact, and we are continue to be aiming at the continuously increasing ordinary dividends based on our policy.

That's ending on my part. You can

Thank you, Timo. Before Q&A, just to wrap it up, key takeaways.

The Q1 in line with our expectations, reflecting the typical seasonality, Q1 being our smallest quarter. Operating environment was characterized by this continued economic and geopolitical uncertainty and the structural change trends.

When it comes to postal and parcel volume trends, they continued to and accelerated. Both of our growth businesses, the eCommerce and Delivery Services and the FLS segment, they continue to grow, and their share of the group net sales is continued to grow.

We have very strong cash flow that improved significantly in Q1, mainly with operational measures, but then on top of that, the first divestment of our investment properties portfolio was completed. Posti continues to take decisive action to improve our cost competitiveness, network synergies, and our first mile parcel efficiency.

Thank you.

Thank you, Antti and Timo, for the presentation, and now we will move into Q&A section. Just a reminder, if you would like to ask a question, you can send those through a chat function on the bottom of the audiocast web page.

Now we have here a large number of questions. Let's start with the question regarding the rising fuel costs.

Do you expect rising fuel costs from the start of the year to affect your costs during this year through an increase in your own fuel costs or through subcontractors?

On the direct impact of fuel costs to Posti, we are neutral. We were neutral in Q1, and we expect to be neutral going forward.

In this industry, the normal commercial practice is to have something called fuel surcharges, where we price forward on a weekly or monthly basis the fuel increases. Yes, there are fuel cost increases, but we will neutralize their impact in our normal trade terms.

Good. Thank you.

Then you mentioned that you have won several new customer contracts. Under which businesses are these new contracts?

In all business groups. We have both in the postal side, we have some of them might become public through our customers' announcements, but I can't name them here.

Also in the ECD side, we have several contract enlargements, some new wins, and then in the Fulfillment and Logistics side, several both industrial and other customers onboarded. Timo mentioned already, and it's in our report, that we have also lost one major large customer in Finland, but as we see from the top-line numbers, we have been able to compensate for that with onboarding several new smaller customers.

Thank you. Then let's move forward to Postal Services.

You raised prices for letter mail by an average of 12% at the start of April. Do you expect to implement further price increases for Postal Services in Q2 or later during this year?

If I first recap, yes, it is in the public domain that we have in February done some price increases regarding certain postal products, and then in April, yes, certain other increases. When it comes to rest of the year, we don't announce them now.

We will see. It is possible that there would be further price increases, but we haven't made those decisions yet.

If we look at our history, there has been typically in the previous years one or two price increase rounds during a year. As said, February and April have been now done.

Thank you. Then there are a couple of questions regarding the Astra renewal program.

How are the annual cost savings targets of the renewal program progressing? What is the target per year, and is it accelerating towards the end of the period?

That as the program is a many-year program, and it's now basically because we are now able to start this year is that it's bringing some benefits already this year, but actually majority of the cost savings are coming starting in a larger scale next year, and they are running throughout this was a three-year period. Then even this year, this will bring some additional benefits and savings compared to what we had the plans earlier on.

Thank you. How are these savings split between Postal Services and eCommerce and Delivery?

These savings will come into the Postal Services and then on the ECD services, but we don't give the split of where it will come on. Actually both of these business groups will benefit out of this.

Right. Then there is the continuation that is the goal to keep Postal Services' profitability at a similar level as today?

We are aiming to keep the profitability in similar levels, yeah. Then

still staying with the program, are the savings from this program incremental due to previously announced cost savings?

The cost savings coming out of this project are included in our plans and guidance for this year. Some of those are additional to what we have had in the plans before, but it's minor part of that.

Basically, we have had plans for kind of operational efficiency improvements in both of this postal or ECD business group anyway coming through this year, but this is bringing some benefits towards the end of the year. Maybe if the question continues to the future years, then this program is aimed at accelerating and bringing more cost savings than our earlier, let's say, usual run rate of this cost savings we have done so far.

Yeah.

Good. Thank you.

Then still regarding the program, what kind of one-off costs should we expect from the program?

One-off costs?

Yes, like a special costs.

Not major. Those one-off costs that would come through this are already booked in Q1 and are visible in the special items that we have reported this in Q1.

Thank you. Oh, then to the new themes then.

What did you sell specifically from your real estate portfolio, and what still remains?

In our investment property value at the end of last year was around €98 million, and now the first part of the sales was related to a one land plot that we had near the airport area, and we sold that in Q1. Total proceeds of that sale was €15 million, and then the net profit impact was €12.4 million.

Then the remaining kind of value roughly in investment portfolio is then €70-something million, €95 minus €15. Then, as we've been saying, we continue to divest and sell these properties, and aim is that towards the end of the year, probably in Q4, the next wave of the sales would materialize, but that is depends and somewhat uncertain whether it's actually will happen this year or move on the next year, but aim is to do it next year.

Like said, most of that property portfolio that we have will be sold during the next three-year time.

Good. Thank you.

Then regarding the digitalization, so as digitalization progresses, do you expect OmaPosti usage to increase driven mainly by private companies rather than a large increase by governmental and public sector institutions?

There's potential in both. What we have now, for example, signed deals in the beginning of the year, they are with private companies who are sending.

Today regarding the public sector messaging, let's say,

well, I'm not sure whether it's the right term to use here, but Suomi.fi, which is part of the DVV authority, public authority in Finland, it currently still has, I would say, in brackets, a monopoly on this government sendings. This should be opening up in the second half of the year, so that a citizen could choose where he or she wants to have their public sector messaging, and of course we in OmaPosti, if citizens are today forced to use this Suomi.fi, we want to promote and have a customer-friendly application where people would voluntarily want to have their messaging, and we of course do marketing actions on that front.

Technically, from an information technology point of view, the opening up of this public side is planned to happen in the second half of the year.

Thank you. Then we have a further question regarding the price increases.

Are we going to introduce price increases also in the parcel business this year,

and

does this include re-commerce?

We are doing some price increase in the parcel business that come effective in April, and will contribute to the Q2 results. We don't give specific details of where does it go, but across all segments of the parcel business.

All right. Thank you.

Now it looks like there are no further questions at the moment, we will conclude the Q&A session. Thank you for all your questions and joining us today, and thanks for our presenters as well.

Posti's Q2 results will be published on August 14th. We look forward to seeing you then.

Now wishing you a sunny spring and approaching summer. Thank you.

Thank you.

Thank you.