@InefficientMarkets With the company’s cash flow, the debt can be paid off in a few years, and there’s also plenty of money for dividends.
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In the future, there will be over 4 million recipients of electronic mail instead of the current 2.2 million. That means quite a few (and mostly unnecessary anyway) letters less for Posti to deliver.
I did not participate in Posti’s offering. In my opinion, there is enormous potential for reduction in traditional mail delivery when this type of reform is made even in the state’s own systems. Even after this, a lot of completely unnecessary mail is still distributed by banks and similar entities, and I believe that reforms will be made in these areas in the coming years, so it will be interesting to see what the postal business looks like in, say, 10 years.
A funny example from the recent past: At the child health clinic, four appointments were booked for the child at the same time. A week later, four separate envelopes arrived in the mail, each stating the booked child health clinic appointment time. It was good that the information was delivered correctly by the postal courier.
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Posti Group Plc’s IPO and share issue has been oversubscribed and the listing will be carried out as planned Posti Group Oyj:n listautumismyynti ja -anti on ylimerkitty ja listautuminen toteutetaan suunnitellusti | Kauppalehti
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After the IPO and offering, Posti will have over 12,100 shareholders, of whom over 1,100 are Posti employees.
2,668,000 Sale Shares are allocated
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In my opinion, the outcome of the offering was quite expected regarding the public offering. No one had to settle for ten shares.
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If only the original one million shares had been distributed, would there have been less than 50 per person? Now it’s 2.6 million.
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This means a strong institutional “appetite” in fulfilling the original target in the offering. A nice start for Posti and the owners.
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The biggest question mark for Posti is the collapse in the volume of letter mail next year. In my own mind, I’m trying to understand these scenarios:
If the volume of letter mail to be delivered halves (?) when official mail moves to digital, I would assume letter delivery in its current form would collapse into an unprofitable business. This is unless the state subsidizes the current delivery obligation with letter mail delivery support. It’s unlikely the state will agree to this during austerity talks. After that, Posti will be forced to significantly raise postage fees for letters and newspapers again. If a stamp or postage paid by a franking machine costs 4-5 euros in the future, then hardly anyone will send letters except under duress. Newspaper companies also cannot afford to pay higher delivery fees than they currently do. Will this trigger a death spiral, and letter delivery will be unprofitable for X years until it is finally shut down in its current form… One option is that in the future, letter mail will be delivered once a week to every street address in Finland; perhaps that way, the business would not be unprofitable.
Decisions on these matters will therefore be made in the Parliament (eduskunta), whether or not to amend the current law related to Posti. And under what conditions. Posti Oyj is almost impossible to analyze years into the future when there is no information about legislative changes in the coming years. The parcel business is good, as is the outsourced warehousing business. Letter mail delivery is a big question mark. It can generate a small profit or become a loss-making entity.
Before this scenario materializes, the share price may well rise this year as there are no worries about tomorrow yet. From next summer onwards, we will start to see from the statistics what the trend looks like… In 2-3 years, the new reality should be clearly visible in the income statement. It can then be stated whether the concern was real or unfounded.
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Regarding letter mail, the situation is that there are currently 12 companies distributing it. In the future, it will likely be the case that letter mail will be distributed in different areas according to a bidding process. This means the state will pay for letter mail distribution to whoever distributes mail “cheapest” to the most unprofitable area. Posti will not distribute letter mail at a loss then – instead, it will do so with a profit according to the tender, or it will be some other company.
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Posti Oyj is currently subject to a distribution obligation, forced to deliver letter mail to remote areas whether it incurs losses or not. The other 12 distribution companies operate in large cities, e.g., Turku and Helsinki, where there is still enough mail to make it somewhat worthwhile to deliver at night at the same time as Hesari (Helsingin Sanomat) is delivered. The rest of Finland, remote areas, etc., are willingly left to Posti’s (Finnish postal service) concern, as it will be loss-making activity for at least the coming years. No private distribution company would agree to go out to the countryside’s small roads to deliver 1 letter at current prices.
If letter delivery in remote areas is done based on competitive bidding in the future, that’s perfectly fine, but the price could double. Who pays the costs? The state will either compensate for the losses or the sender of the mail will pay 5 euros postage for a letter/magazine. If the costs fall on the sender, the death spiral I mentioned earlier will start (postage too expensive, no one posts anything anymore, turnover collapses, letter delivery makes losses for X years until a change in law alters the situation in a way we don’t yet know).
These scenarios are currently being speculated, and no decisions on legislative changes have been made yet. It’s pointless to ask Posti’s CEO about it as he doesn’t make those decisions. The government elected after the next parliamentary elections will then make decisions based on the information available at that time.
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I read through that for a moment, and I couldn’t find information on how shares are allocated to institutions. Is that usually disclosed? My recollection from Sweden is that institutions do not need to be treated equally, meaning shares are allocated according to who they want to give them to, not by the ‘cheese grater’ method, as was done on the retail side now.
Now, from a “retail investor’s” perspective, this went quite well, meaning I personally got what I hoped to get, and this was achieved by using 100% of Nordnet’s limit, and after the cut, the result was as desired. Quickly calculated, subscriptions for that 2,668,000 share amount (which, in relation to the amount allocated to institutions, is exactly
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It seems quite clear to me that a company listed on the stock exchange is not obligated to sell at a loss, meaning the ultimate payer for distribution activities is the state. At least the current government’s basic principle is likely to put distribution up for tender in the future, so that the state would save money.
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Remote areas are unlikely to be put out to tender in the future. It is a statutory obligation to deliver letters throughout the entire country if one wants to deliver mail at all, meaning it’s funded by cross-subsidization.
The additional risk here is that even more such obligations could be developed.
The volume of letter mail has already plummeted, and as a result, postal operations have been in a continuous cycle of adaptation and change throughout the 21st century. In the future, the delivery obligation will certainly be changed and delivery days further reduced, regardless of who bears the cost. A small parcel/a competitor’s equivalent product is already a convenient way to get an urgent shipment delivered with tracking, and the price also seems to be more affordable than express mail.
So, I personally don’t expect any major sudden change to postal delivery operations.
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The state will likely organize several more offerings as they reduce their ownership. Pension companies are probably expected to participate in each, so they likely don’t even want their target position now.
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US institutions that operate on a public benefit dividend distribution principle will also participate in future offerings if the dividend yield is reasonable and secure. Even a 4% dividend yield is high by US standards. Well, in the domestic stock market, people are probably used to higher dividends, but I suppose Posti’s dividend is quite good, as the state is eager for money.
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Does anyone have half of their mail as official letters? I don’t know my own share because I’ve been receiving them through digital channels for years. There haven’t been many of those either.
I guess most of the distribution consists of local newspapers and/or advertisements. Bills are also all moving to digital channels. Posti is present in those too, the scanning operations are, if I remember correctly, in Estonia. To me, that business has been a bit tacked on; when you can get letters as newsletters in your email and bills in your online bank, why is NetPosti (or whatever it’s called these days) even needed?
The reduction of the service network is almost certain with the listing, almost everything can already be handled online even in Posti’s case: Buying stamps, sending packages, ordering and directing, address matters, reading letters…
There are then that many potential closures.
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I’m correcting that I meant foundations as buyers.
Isot sijoittajat ryntäsivät ostamaan Postia – Syy löytyi | Kauppalehti
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The service network has already been significantly cut down. Posti only has 70 of its own stores. The others are partnership agreements. This means there is very little in-house staff in what is known as stamp sales. Their own staff is mainly in sorting centers and distribution.
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Posti hardly has its own service network left; instead, they largely operate as agent post offices in conjunction with shops, gas stations, kiosks, etc. These points also handle Posti’s parcel service, so their number is unlikely to be significantly reduced.
I have no information about Posti’s compensation to these agent post offices.
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