Posti Group Corporation

Interim ReportNovember 2, 2015

Contents

• July–September 2015

• January–September 2015

• Business groups

- Postal Services

- Parcel and Logistics Services

- Itella Russia

- OpusCapita

• Appendices

Posti Group2

November 2, 2015

Posti Group3

November 2, 2015

652605

0

200

400

600

800

Q1-Q3/2014 Q1-Q3/2015

160147

0

50

100

150

200

Q1-Q3/2014 Q1-Q3/2015

-7%-8%

298

209

0

100

200

300

400

Q1-Q3/2014 Q1-Q3/2015

-30%

22

24

1516171819202122232425

Q1–Q3/2014 Q1–Q3/2015

+4%

Million

units

OpusCapita’s electronic transactionsDomestic freightParcels

MagazinesNewspapersAddressed letters

Volumes Q1–Q3/2015

Million

units

2,742,54

1,62

0,0

0,5

1,0

1,5

2,0

2,5

3,0

2013 2014 Q1-Q32015

159,9173,1 179,9

191,0

141,0

0

50

100

150

200

250

2011 2012 2013 2014 Q1-Q32015

July–September

Posti Group4

November 2, 2015

Key events

November 2, 2015

Posti Group5

• Operating result before non-recurring items

improved to EUR 9.6 (6.8) million.

• Positive result in Parcel and Logistics

Services.

• Parcel services volume grew by 2.5%.

• Sales of logistics properties in Sweden and

Norway.

• Positive ruling for Posti in VAT case.

• Comparable net sales down 7.5%.

• Continued decline in mail delivery volumes.

• Logistics market continues to decline.

• High season delayed in Russia and weak in

Finland.

• Non-recurring items EUR -11.8 million,

including impairment losses in Russia and an

adjustment in gain on real estate sale.

+

–

435,1373,5

-5%

-14%

-20%

-15%

-10%

-5%

0%

0

100

200

300

400

500

Q3 2014 Q3 2015

NET SALES

MEUR Growth %

6,8

9,6

1,6 %

2,6 %

0%

1%

2%

3%

0

5

10

15

Q3 2014 Q3 2015

OPERATING RESULT before non-recurring items

MEUR Operating result %

Key figuresJuly–September 2015

Posti Group6

• Net sales down 14.2%.

• Decline in net sales due

to falling postal delivery

volumes, the weak

logistics market and the

depreciation of the ruble.

• Operating result before

non-recurring items

improved.

• Operating result was

boosted by the

divestment of

international freight

operations as well as

efficiency improvement

measures.

• Operating result

improved.

November 2, 2015

7–9/2015 7–9/2014 2014

Net sales, EUR million 373.5 435.1 1,858.7

Operating result (non-IFRS), EUR million* 9.6 6.8 50.8

Operating result (non-IFRS), %* 2.6 1.6 2.7

Operating result (EBIT), EUR million -2.2 -7.4 5.8

Operating result (EBIT), % -0.6 -1.7 0.3

Result before taxes, EUR million -7.0 -10.1 -4.6

Result for the period, EUR million -1.1 -9.1 -4.4

Return on equity (12 months), % -0.7

Return on invested capital (12 months), % 1.0

Equity ratio 45.9

Gearing, % 17.2

Gross capital expenditure, EUR million 11.8 12.0 57.5

Change in costs*Q3/2014 => Q3/2015

Posti Group7

* excluding non-recurring items

November 2, 2015

January–September

Posti Group8

November 2, 2015

Key events

November 2, 2015

Posti Group9

• The Group’s operating result % excluding non-

recurring items was nearly unchanged year-on-

year despite the decline in net sales.

• The result of Parcel and Logistics Services turned

to positive.

• Postal Services’ operating result improved.

• Parcel services volume grew by 4%.

• International freight operations were divested to

improve profitability.

• Return on investment improved to 6.3%.

• The sell and lease back of three postal centers and

one warehouse.

• Net sales down 11%, comparable net sales down

6%.

• Operating result in Russia turned losses.

• OpusCapita’s operating result before non-recurring

items declined by 33%.

• Continued decline in mail delivery volumes.

• The ruble depreciated by 47% from the previous

year.

+

–

1 367,01 215,6

-6%

-11%-15%

-10%

-5%

0%

0

500

1000

1500

Q1–Q3 2014 Q1–Q3 2015

NET SALES

MEUR Growth %

27,323,3

2,0 % 1,9 %

1%

2%

3%

0

10

20

30

Q1–Q3 2014 Q1–Q3 2015

OPERATING RESULT before non-recurring items

MEUR Operating result %

Key figures January–September 2015

Posti Group10

• Net sales down 11%.

• Decline in net sales

due to falling postal

delivery volumes, the

weak logistics market

and the depreciation

of the ruble.

• The operating result

before non-recurring

items declined.

• The operating result

was improved by non-

recurring items of

EUR +23 million.

• Operating result

improved.

November 2, 2015

1–9/2015 1–9/2014 2014

Net sales, EUR million 1,215.6 1,367.0 1,858.7

Operating result (non-IFRS), EUR million* 23.3 27.3 50.8

Operating result (non-IFRS), %* 1.9 2.0 2.7

Operating result (EBIT), EUR million 46.2 -5.1 5.8

Operating result (EBIT), % 3.8 -0.4 0.3

Result before taxes, EUR million 37.2 -12.2 -4.6

Result for the period, EUR million 31.7 -8.9 -4.4

Return on equity (12 months), % 5.9 1.4 -0.7

Return on invested capital (12 months), % 6.3 1.3 1.0

Equity ratio 48.8 47.2 45.9

Gearing, % 8.1 19.9 17.2

Gross capital expenditure, EUR million 43.7 42.9 57.5

Change in costs* Q1–Q3/2014 => Q1–Q3/2015

Posti Group11

* Before non-recurring items

November 2, 2015

Employees

Number of employees in Finland and abroad

• At the end of September,

the number of employees

stood at 21,187

(23,459).

• Of these, 16,406 (18,340)

worked in Finland.

• The Group’s personnel

expenses decreased by

nearly 11% year-on-year.

• As of September 30, 2015,

a total of 1,195 employees

have applied for the Uusi

polku (New path) program,

and 797 have been

accepted.

Posti Group12

Employees

by business group

Other operations

includes all employees

in Operations and Group

Functions.

November 2, 2015

0

5000

10000

15000

20000

25000

30000

2011 2012 2013 2014 Q1-Q32015

Othercountries

Finland

Postal Services

Parcel andLogistics Services

Itella Russia

OpusCapita

Other functions

Business groups

Posti Group13

November 2, 2015

Postal Services

* excluding non-recurring itemsPosti Group14

November 2, 2015

7–9/2015 7–9/2014 Change % 1–9/2015 1–9/2014 Change %

Net sales 161.6 168.6 -4.2% 535.0 553.5 -3.3%

Operating result

(non-IFRS)*

5.7 7.5 -24.0% 31.6 29.0 8.7%

Operating result

(EBIT)

6.4 7.5 -14.6% 32.5 29.0 11.7%

Operating result

(non-IFRS), %*

3.5% 4.4% 5.9% 5.2%

Operating result

(EBIT), %

4.0% 4.4% 6.1% 5.2%

July–September

• The decrease in net sales was attributable to a

decline in domestic delivery product volumes.

Chinese e-commerce deliveries to Russia

started this year.

• Cost adaptation measures have not fully

compensated for the decline in the volume of

delivery products. The operating result

declined.

January–September

• The operating result before non-recurring items

improved due to the strong first quarter,

improvements in operational efficiency and the

increases in postage fees that took effect at the

beginning of 2015.

• Operating result improved.

Postal Services

July–September

• The volumes of addressed letters,

newspapers and magazines decreased.

• Chinese e-commerce deliveries to

Russia started this year.

Posti Group15

652605

0

100

200

300

400

500

600

700

Addressed letters

Q1–Q3/2014 Q1–Q3/2015

Million

units

160147

0

50

100

150

200

Magazines

Q1–Q3/2014 Q1–Q3/2015

-7%

-8%

November 2, 2015

298

209

0

50

100

150

200

250

300

350

Newspapers

Q1–Q3/2014 Q1–Q3/2015

-30%

January–September

• Electronic letter volume grew by 4%.

• The volumes of unaddressed deliveries

increased significantly due to Postinen.

• The number of Netposti users increased by

7% and stood at 622,000 at the end of

September.

* excluding non-recurring items

Parcel and Logistics Services

* before non-recurring itemsPosti Group16

November 2, 2015

7–9/2015 7–9/2014 Change % 1–9/2015 1–9/2014 Change %

Net sales 137.5 174.9 -21.4% 448.1 538.4 -16.8%

Operating result

(non-IFRS)*

2.1 -6.8 - 1.0 -9.1 -

Operating result

(EBIT)

4.3 -10.7 - -10.4 -14.0 -

Operating result

(non-IFRS), %*

1.5% -3.9% 0.2% -1.7%

Operating result

(EBIT), %

3.1% -6.1% -2.3% -2.6%

July–September

• Comparable net sales decreased.

• The decline in net sales was due to falling

volumes in domestic freight, a decline in the

processing volumes and fill rates in the

warehousing business, and the general

economic situation.

• Significant improvement in the result particularly

due to the divestment of international freight

operations.

January–September

• Comparable net sales decreased.

• The operating result before non-recurring items

improved particularly due to higher demand for

parcel services as well as the effects of warehouse

consolidation and efficiency improvement

measures implemented in supply chain solutions.

Operating result improved.

Parcel and Logistics Services

July–September

• Volumes continued to fall in domestic freight,

warehouse handling volumes and fill rates

declined.

• Parcel services volume continued to grow.

Posti delivered 7.8 million parcels. Parcel

services volume grew by 2.5%.

Posti Group17

Domestic freight

0

50000

100000

150000

200000

250000

300000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 2014 2015

results

* before non-recurring itemsNovember 2, 2015

22

24

1516171819202122232425

Parcels

Q1–Q3/2014 Q1–Q3/2015

+4%

January–September

• Posti delivered 24.2 million parcels. Of these

7% went through parcel points. The number

of parcels going through parcel points grew

by 48% year-on-year. Parcel services volume

grew by 4%.

• 1,406 service points at the end of September.

23 new parcel points went into service and

their number totaled 482.Million

units

Itella Russia

* before non-recurring itemsPosti Group18

November 2, 2015

7–9/2015 7–9/2014 Change % 1–9/2015 1–9/2014 Change

%

Net sales 29.3 47.2 -37.8% 88.1 131.3 -32.9%

Operating result (non-

IFRS)*

-1.4 2.7 - -4.3 0.4 -

Operating result

(EBIT)

-9.0 2.7 - -12.2 0.3 -

Operating result (non-

IFRS), %*

-4.6% 5.7% -4.8% 0.3%

Operating result

(EBIT), %

-30, 7% 5.7% -13.8% 0.2%

July–September

• Measured in local currency, net sales decreased

by 8.6% due to the weak general economic

situation and the resulting fall in warehousing,

processing and transport volumes.

• Euro-denominated net sales decreased by

37.8%.

January–September

• Operating result in Russia turned losses.

• The ruble depreciated by 47% year-on-year.

• The decrease in the operating result was due to

lower volumes as well as the development of the

ruble exchange rate and the currency basis of

lease expenses.

Itella Russia

July–September

• Warehousing, handling and transport

volumes fell.

• Operational efficiency in warehousing

was improved.

Posti Group19

90%91%91%92%93%94%93%

88%89%88%87%85%

82%83%

86%88%

94%93%92%93%92%92%90%

86%83%85%

83%81%80%

77%

82%

86%

89%

56%

61%

65%

68%70%71%

74%72%71%

73%73%

79%81%81%81%80%

76%76%

70%70%69%

72%72%

76%

73%

78%

81%82%80%

84%

89%

80%

85%

40%

50%

60%

70%

80%

90%

100%

1–

20

13

2–

20

13

3–

20

13

4–

20

13

5–

20

13

6–

20

13

7–

20

13

8–

20

13

9–

20

13

10

–2

01

3

11

–2

01

3

12

–2

01

3

1–

20

14

2–

20

14

3–

20

14

4–

20

14

5–

20

14

6–

20

14

7–

20

14

8–

20

14

9–

20

14

10

–2

01

4

11

–2

01

4

12

–2

01

4

1–

20

15

2–

20

15

3–

20

15

4–

20

15

5–

20

15

6–

20

15

7–

20

15

8–

20

15

9–

20

15

Moscow Other areas

Warehouse

fill rates

* before non-recurring itemsNovember 2, 2015

January–September

• As of September 30, 2015, the ruble had

depreciated by 47% year-on-year.

• The average warehouse fill rate in

January–September was 83% in Moscow

and 85% in other areas.

OpusCapita

* excluding non-recurring itemsPosti Group20

November 2, 2015

7–9/2015 7–9/2014 Change % 1–9/2015 1–9/2014 Change %

Net sales 60.8 60.4 0.6% 193.5 192.5 0.5%

Operating result

(non-IFRS)*

4.2 5.1 -16.5% 11.1 16.6 -33.2%

Operating result

(EBIT)

3.8 3.0 24.5% 9.7 12.7 -23.9

Operating result

(non-IFRS), %*

7.0% 8.4% 5.7% 8.6%

Operating result

(EBIT), %

6.2% 5.0% 5.0% 6.6%

July–September

• The non-IFRS operating result was reduced by a

decline in volumes in the printing business across

all countries of operation. The outsourcing business

was weakened by extra personnel expenses

related to customer projects. Investments in

development programs related to supply chain

financing solutions, robotics and internationalization

increased.

January–September

• Net sales grew slightly.

• The operating result before non-recurring

items declined. The operating result declined.

OpusCapita

July–September

• OpusCapita ceased its operations in

Slovakia on September 30, 2015.

Posti Group21

160173 180

191

141

0

50

100

150

200

250

2011 2012 2013 2014 Q1–Q3 2015

Electronic messages

November 2, 2015

January–September

• Continuous service business operations

accounted for 94% of net sales.

• Total transaction volume 400 million.

• Electronic transaction volume grew to 141

million, 35% of the total transaction volume.

• Patrik Sallner took up his post as CEO on

October 5.

Outlook for the rest of the year

Market environment

• The Group’s business is characterized by seasonality. Net sales and operating profit in the business groups are not accrued evenly over the year. In postal services and consumer parcels, the first and fourth quarters, in particular, are typically strong, while the second and third quarters are weaker in comparison.

• Uncertainty in Russia continues.

Net sales

• Comparable net sales in euros for 2015 are expected to decrease significantly compared to 2014.

Operating result (EBIT)

• The Group’s operating result before non-recurring items is expected to remain on par with the previous year if the negotiations on the collective agreement reach a conclusion without significant operational disruption. The operating result for 2015 will include significant non-recurring items.

Capital expenditure

• Capital expenditure is expected to increase from 2014.

Posti Group22

November 2, 2015

Appendices

Posti Group23

November 2, 2015

• Operating profit percentage exceeds 5%

• Gearing does not exceed 35%

• Return on invested capital is at least 10%

• More than 10% of the Group’s net sales will

come from new business areas in 2018.

Financial targets

Posti Group24

November 2, 2015

22,1 23,521,1

17,2

8,1

0

5

10

15

20

25

2011 2012 2013 2014 Q1-Q32015

-0,2

4,7

1,3 1,0

6,3

-2

0

2

4

6

8

2011 2012 2013 2014 Q1-Q32015

%%

Return on invested capitalGearing

1,6

2,7 2,6 2,7

1,9

0

1

2

3

2011 2012 2013 2014 Q1-Q32015

Operating profit percentage

%

We will create new

warehouse

and transport services in

areas such as food

logistics

We will develop digital

marketing and

information services by

leveraging Posti’s

data

We will develop Home

services including

meal delivery, care,

security and property

services

• The EUR 100 million target for the

performance improvement program for

2013–2014 was reached ahead of

schedule. The target was exceeded, with

total savings amounting to nearly EUR 140

million.

• A new performance improvement program

for 2015–2016 targeting savings of EUR 75

million. The Group expects to reach this

target ahead of schedule.

• The aims include achieving synergy

benefits through the consolidation of

production, improving the efficiency of the

ICT function, achieving savings in sourcing,

and simplifying the product portfolio.

Performance improvement programs

Posti Group25

November 2, 2015

140

42

0

20

40

60

80

100

120

140

160

2013-2014 2015-2016

EUR million

Target: 100 million

Target: 75 million

Group cost structure January–September 2015

Posti Group26

47%

9%

17%

7%

6%

4%1%

9%

Personnel expenses Subcontracting

Freight and transport Lease expenses

Depreciation IT expenses

Sales and marketing Other

November 2, 2015

Indirect costs, EUR million

386

320

0

50

100

150

200

250

300

350

400

450

Q1-Q3/2014 Q1-Q3/2015

-17%

Balance sheet

Posti Group27

November 2, 2015

EUR million

180 186

577422

135

172

483507

13751287

30.9.2014 30.9.2015

TOTAL ASSETS

Goodwill Property, plant & equipment

Other non-current assets Current assets

628 605

47,2 % 48,8 %

30.9.2014 30.9.2015

EQUITY AND EQUITY RATIO

Total equity Equity ratio (%)

Cash flow

Posti Group28

November 2, 2015

1–9/2015 1–9/2014 2014

Result for the period 31.7 -8.9 -4.4

Cash flow from operating

activities before financial items

and taxes

30.9 65.8 108.6

Cash flow from operating

activities

29.2 50.7 93.2

Cash flow from investing

activities

-42.9 -18.3 -46.3

Cash flow from financing

activities

-4.8 -19.8 -23.2

Change in cash and cash

equivalents

-18.5 12.5 23.7

Cash and cash equivalents at

the end of the review period

79.6 91.7 98.7

86119

81 93

29

-67-123

-49 -46 -43

-150

-100

-50

0

50

100

150

2011 2012 2013 2014 Q1–Q3 2015

Cash flow from investing activities, EUR million

Cash flow from operating activities, EUR million

• Cash flow from operating activities before

capital expenditure was EUR 29.2 (50.7)

million.

• Capital expenditure amounted to EUR

38.7 (32.5) million. The Group invested in

vehicles, production projects, parcel

points, terminal improvement projects and

the transport fleet.

• Proceeds from divestments totaled

EUR 135.8 million.

Net debt and the maturity structure of

loans

Maturity structure of loans and financing

arrangements, EUR million

Posti Group29

November 2, 2015

Net debt and

gearing

147

161

139

99

49

22,1 %23,5 %

21,1 %

17,2 %

8,1 %

0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

160

180

2011 2012 2013 2014 Q1–Q3 2015

Net debt, EUR million Gearing (%)

150

100

150

0

20

40

60

80

100

120

140

160

2015 2016 2017 2018 2019 2020

Bonds Unused credit limits

Result announcements

in 2016

Financial statements for 2015:

February 12, 2016, at 10:00 a.m.

Q1: April 29, 2016, at 10:00 a.m.

Q2: July 18, 2016, at 10:00 a.m.

Q3: October 31, 2016, at 10:00 a.m.

Posti Group30

November 2, 2015