Bring Citymail Danmark to close its mail distribution operations in Copenhagen
Bring Citymail has distributed industrial mail in the Copenhagen area since 2007. The financial crisis and competition conditions have resulted in the company failing to become profitable in the space of three years. Negotiations are now being started to terminate the mail distribution operations and dismiss 440 employees.
Bring Citymail in Denmark is owned by Norway Post and has focused aggressively on mail distribution in the Copenhagen area as a challenger to Post Danmark. Its start-up was affected by the financial crisis and economic slump and Bring Citymail Danmark has also had a value added tax (VAT) disadvantage of 25 percent compared to its main competitor, Post Danmark, which is exempt from paying VAT.
“We have not succeeded in making the mail distribution operations in Denmark profitable, and we apologise for this to Danish customers and companies that wanted an alternative,” says Dag Mejdell, the CEO of Norway Post.
The plans entail Bring Citymail Danmark carrying out all its obligations and contracts with customers. It is now starting the process of providing information to and having discussions with the employee representatives. Bring Citymail Danmark has 440 employees.
Including the costs of establishing the company and the negative results achieved during its first years of operation, Bring Citymail Danmark has made a total loss of around NOK 500 million (US$89 million).
The plans to discontinue Bring Citymail's operations in Denmark do not affect the operations in Sweden. Although the Swedish market is also hard hit by the financial crisis, Bring Citymail in Sweden does not have a VAT disadvantage compared to Sweden's Posten. The company has existed for 18 years and has a stable customer portfolio.
In order to cope with the decline in economic activity, Bring Citymail in Sweden has implemented a cost-cutting programme. The efficiency programme is continuing and the company is also increasing its sales efforts.
“We expect the Swedish operations to be profitable over time, even though the financial crisis and geographic expansion have led to the company making losses over the past few years,” says Mejdell.