Nordic Credit Rating has affirmed its 'A' long-term issuer rating on pan-Nordic mail and logistics operator PostNord AB . The outlook is stable. The 'N2' short-term issuer rating has also been affirmed as well as the 'A' issue rating of its senior unsecured debt.
Rating rationale
The affirmation reflects PostNord's strong position as the leading logistics operator in the Nordic region and a successful wind down of its mail operations in Denmark. We expect the company's role as Sweden's universal mail service provider to generate synergies with its growing parcel delivery and logistics business. The company maintains sound financial leverage and profitability, comparable to that of its northern European peers, despite the challenges of transitioning away from declining mail volumes and still stringent regulatory delivery requirements. In addition, we believe the Swedish and Danish governments are highly likely to provide support, if needed, given their dual ownership.
The long-term issuer rating is constrained by the continued decline in Swedish mail volumes, some near-term final costs related to the closure of the Danish mail operation and continued weak performance in the Norwegian parcel business, all which continue to pressure margins. We also expect relatively high capital expenditure over 2026-2028, which will weigh on cash flow, as the company continues to expand its Nordic parcel delivery and logistics businesses.
We have revised our assessment of PostNord's financial ratios to reflect improved earnings and cash flow leading to lower leverage than expected in 2025. While partly due to the compensation received from the Danish state to cover close-down costs paid out over 2026-2028, it was also due to continued execution of its ongoing cost-savings program.
Stable outlook
The stable outlook reflects important third-party logistics contract wins in 2025 that point to PostNord's strong Nordic offering. It also reflects our expectation that its strategy of growing the parcel delivery business by further leveraging its Nordic network, together with meaningful cost saving measures, will offset projected average annual 9% revenue declines in the mail business through 2028.
We expect PostNord to continue its transition from mail to parcel delivery without any significant change in financial leverage. In addition, we expect some regulatory relief from universal service obligations in Sweden, such as relaxed delivery deadlines, that will enable the company to further adjust its cost base to lower mail volumes.
We could raise the rating to reflect a growing EBITDA contribution from a sustainably profitable parcel business, improved profitability (EBITDA margins above 12%), and continued low leverage.
We could lower the rating to reflect increased leverage, with net debt to EBITDA above 2.0x and FOCF to net debt below 25%, on a continued basis. We could also lower the rating on loss of revenues and weaker margins, or a loss of the universal service provider status or reduced government policy role in Sweden.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A | A |
| Outlook: | Stable | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A | A |
Contacts:
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
Gustav Nilsson, analyst, +46735420446, gustav.nilsson@nordiccreditrating.com
Sean Cotten, lead senior analyst, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.