Translation: Original published in Finnish on 4/30/2026 at 7:10 am EEST.

Posti's Q1 earnings performance was weaker than expected, although some of the underlying drivers were, in our view, temporary. We believe the company's earnings trend will improve towards the end of the year, with earnings returning to growth in 2027. In light of this and the generous dividend yield, we consider the stock's expected return attractive. We reiterate our Accumulate recommendation, but lower the target price to EUR 9.5 (EUR 10.0) due to changes in our estimates.

Subdued earnings development

Posti's Q1 revenue decreased by 1%. Sales increased in both eCommerce and Delivery Services and Warehousing and Logistics Services. In the parcel business, strong growth in consumer-to-consumer trade drove volume growth, while in the warehousing business, the company had won new, smaller customers. Postal Services revenue declined as expected due to both structural decline and the accelerated digital transition of official mail. The company's adjusted EBIT for Q1 weakened to 6.5 MEUR (Q1'25: 10.5 MEUR), corresponding to a profitability of ~2%. Reported EBIT (9.2 MEUR) was boosted by, among other things, sales gains from the sale of investment properties (12 MEUR), which also supported the company's financial position and, according to our thesis, future profit distribution. Adjusted earnings declined in all service segments, which we view as negative in relation to the increased volume of growing businesses.

Guidance unchanged, we made slight downward revisions to our estimates

Posti reiterated its guidance for 2026, which indicates revenue of 1,400–1,500 MEUR (2025: 1,448 MEUR) and an adjusted EBIT of 63–79 MEUR (2025: 69 MEUR). In practice, the guidance implies a development for the rest of the year that is roughly in line with the comparison period. We lowered our near-term adjusted EBIT forecasts by roughly 5%. The forecast calculations were largely a result of a weaker Q1 than we anticipated. Our 2026 EBIT estimate (65 MEUR) is now near the lower end of the guidance range. We expect Posti's EBIT to decline from the comparison period, driven by volume pressure in Postal Services and inflated Group costs.

Earnings trend improving

We believe the Group's earnings will return to growth in 2027. A key driver behind the earnings growth is increased sales in growing segments. In addition to growth, efficiency gains will come from the combined delivery network of Postal Services and eCommerce and Delivery Services, which we believe will improve the Group's profitability. In addition, Posti has introduced a self-service delivery model, which we believe will moderate the direct costs associated with currently lower-margin C2C parcels already by the end of the year. Overall, we expect the Group's adjusted EBIT to increase by ~4% annually over the next three years. A key risk to our forecast is the prolonged conflict in the Middle East, which could weaken economic fundamentals and thus impact the transport and logistics sector.

Risk/reward remains attractive

We believe Posti is valued neutrally based on LTM earnings. In our view, the valuation multiples for the coming years (2027e P/E 8x and IFRS 16 adj. EV/EBIT 8x) decline to attractive levels for a company generating a good return on capital (ROCE ~13%). In our view, Posti's significant discount relative to its key peers supports a moderate valuation. In our view, the expected return on the share consists of ~5% earnings growth and a 10% dividend yield. In this case, the total expected return (~15% p.a.) exceeds our required return, making the stock's risk/reward ratio attractive, in our view. Our sum-of-the-parts and DCF calculations show that the fair value of the share (>EUR 10) is above the current price, which indicates upside potential and supports our positive view.