Omniva first quarter results impacted by Ukraine war, rising energy prices

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A post office on Pärnu Maantee in Tallinn.
A post office on Pärnu Maantee in Tallinn. Source: Priit Mürk/ERR

Omniva Group's turnover and profit for the first three months of 2022 fell short of expectations, with the result affected by the start of Russia's full-scale invasion of Ukraine in late February as well as rising energy and fuel prices, the Estonian-based international logistics company said on Monday.

The group's operating income totaled €31.5 million in the first quarter, down 22 percent on year, Omniva said in a press release. Revenues from international transit and logistics services decreased the most. The group earned an operating profit of €401,000 in the first quarter, which was lower than expected.

According to Mart Mägi, chairman of the management board at Omniva, the company's financial performance last quarter was strongly impacted by Russia's military aggression in Ukraine. In March, Omniva also joined in the imposing of international sanctions, terminating the delivery of as well as the acceptance of subscriptions to periodicals from Russia, and suspending its servicing of Western Union transactions with Russia and Belarus. The national postal service provider already did not deliver Belarusian publications within Estonia.

"Economic performance was affected primarily by the decrease and absence of international trade due to the war," Mägi said. "Prolonged journeys of international shipments and the resulting increase in costs as well as higher fuel and energy prices also had a significant impact."

According to the CEO, however, the group is expecting to see a gradual recovery of business from April onward in connection with new destination countries.

In the first quarter of 2022, the group's operating expenses totaled €31.1 million, down 3 percent on year. The decrease in direct costs was related to the decrease in the volume of international shipments, while labor costs increased due to the wage increase of primary-level workers in the middle of last year.

At the beginning of the year, the provision of domestic services was affected by difficult winter weather conditions as well as by restrictions caused by the COVID-19 pandemic and the illness of employees, to which the company quickly adapted, reorganized its operations and dispersed deliveries to provide services across Estonia.

Omniva's market share in the Estonian package terminal market has remained stable, with a slight increase compared with the beginning of the year, reaching 45 percent in March, according to the Estonian E-Commerce Association.

At the end of March, the first virtual package delivery service, allowing for the receipt of packages, was launched on the Western Estonian island of Vormsi. Ten new electric cars were also introduced by the company to support the provision of more environmentally friendly services.

In order to increase its capacity to provide international services, the logistics group has decided to build a modern new sorting center in Lithuania. To be built in the Kaunas Free Economic Zone, the 20,000 square meter sorting center will allow for the sorting of up to 12,000 packages per hour. It is scheduled to be completed in fall 2023.

Efforts to support Ukraine continue

Under a dedicated humanitarian aid service, private individuals in Estonia can mail humanitarian aid, including medicines, consumer goods and other basic necessities, in packages of up to 30 kilograms directly to Ukraine free of charge.

Since mid-March, Estonian residents have used the service to send 820 humanitarian aid packages with a total weight of nearly 7 tons to Ukraine. Perishable foodstuffs, fragile items, alcohol and weapons are prohibited, however the service has been used primarily to send basic necessities, medicines, food, menstrual products as well as clothes to Ukraine.

According to Omniva officials, the humanitarian aid mailing service is being operated in cooperation with Ukraine's own national postal service, UkrPoshta, with Omniva delivering packages to the Ukrainian-Polish border, where a UkrPoshta representative then picks them up and delivers them to post offices operating in Ukraine. Delivery times are currently running in the range of 2-3 weeks.

Omniva is also providing charities and institutions with free transportation for humanitarian aid collected for Ukraine.

Estonia's "Glory to Ukraine!" stamp was first released on March 24, exactly one month after Russia's current war in Ukraine began. With a nominal price of €1.90, which means it can be used to send mail worldwide, the stamp depicts a dove of peace against a background in the colors of the Ukrainian flag. It also includes the messages "Glory to Ukraine!" in Ukrainian and "Estonian supports Ukraine" in Estonian. The stamp was issued in an edition of 50,000, or twice the circulation of a traditional Estonian-themed postage stamp.

"Glory to Ukraine!" stamps can be purchased either online from Omniva's online store or in post offices across Estonia.

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Editor: Aili Vahtla

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