Ireland’s An Post said its operating profit dropped by 62% in 2011 compared to the year before as mail volumes declined 7%.
After tax, the company was just about profitable in 2011, recording a EUR 347,000 profit, following on from a EUR 24.6m loss in 2010 largely from that year’s severance and early retirement payments.
Releasing its full year results yesterday, the Irish postal service said its revenues were stable on EUR 807m, with EUR2m of revenue growth overall thanks to record turnover among its subsidiaries, which generated EUR 84m of revenue, up 24% on 2010, helping to lessen its reliance on traditional mail revenues. UK-based international mailing company Air Business was among An Post’s strongly performing subsidiaries.
But in the year that Ireland’s postal market opened to full competition, a 7% decline in core mail volumes contributed to a 23.5% drop in mail volumes since the peak in 2007, and the company is predicting another 7% decline in 2012.
Mail revenues totalled EUR 535m, down 3% on 2010, with An Post currently facing legal action from regulator ComReg for failing to meet required delivery quality standards.
An Post chief executive Donal Connell said his company’s 2011 results were “very solid” in a “tough business nationally and globally”.
“The achievement of ongoing cost savings whilst improving quality and innovation is a real challenge but it is the key to our future and will enable us to take advantage of new business opportunities,” he said.
“Ongoing change and adaptation is an inevitable part of the Irish and international postal, financial services and communications industries. The pace of change must be accelerated to help address the issue of declining volume. We will address this with determination and we will ensure the development of innovative products and the provision of high quality, value for money, relevant, customer focussed services. I have every confidence, and a strong belief in our ability to deliver at every level,” Connell concluded.
Universal service concern
An Post cut EUR 15.4m from its labour costs during 2011, with 300 jobs eliminated by voluntary exit schemes. The company has now reduced its workforce by 1,100 since 2008, and is planning to cut a further 1,500 full-time equivalent jobs by 2016.
EUR 10m in non-pay cost savings were also achieved during the year.
Nevertheless, An Post said it has requested regulator ComReg to increase the basic 55c postal rate later this year to help cope with its rising mail service costs. The basic tariff was last increased in 2007, since when an Post has been delivering to 100,000 more addresses.
An Post said the impact of the continuing mail decline on its five-day-a-week universal service was now a “priority issue”.
Connell said: “It is essential that the serious issue of funding the USO be resolved. The USO is a vital piece of national infrastructure, central to the business and community life of the country and a key facilitator of economic activity including new business innovation.”
An Post Chairman John Fitzgerald said his company was a “more modern, innovative and cost effective enterprise than ever before”, but said despite funding its transformation from its own resources, key stakeholders now had to work together to ensure the future viability of the universal service.
“A strong and stable mails and retail infrastructure, trusted as it is by Irish and international customers, is an essential support to the process of economic recovery,” Fitzgerald said.
An Post also saw its pension deficit increasing in 2011, by more than 31% to EUR 484m, with its pension investments hit by the uncertainty in the markets.
Source: Post&Parcel/An Post