Japan Post’s main business to swing into black

Japan Post expects to secure roughly 15 billion yen in net profit from its postal delivery operations for the current fiscal year, taking just half the time to achieve an initial target of 14 billion yen net profit, sources at the public corporation said.

The projected profit size means that postal operations will return to the black for the first time in two year. Japan Post was created last April 1 to take over the governmental Postal Services Agency

With the robust profit outlook for the year through March 31, Japan Post will revise upward its net profit target in the mainline business for the next business year to 20 billion yen from the initially estimated 12.6 billion yen, the sources said.

Japan Post has placed biggest priority in turning around postal operations, which have been flagging since the late 1990s in line with the development of the Internet use and private-sector courier services.

But the expected strong showing may lead to a view that Japan Post does not need to be privatized, since it shows that the current management structure as a public corporation can be effective in improving services and earnings at the same time.

The sources said the better-than-expected profit was achieved despite a slight fall in revenues as the entity worked hard to slash personnel costs and other expenditures, which resulted in a drop by around 70 billion yen in overall costs.

Privatization of postal operations, which also include savings and “kampo” life insurance, is Prime Minister Junichiro Koizumi’s pet project as he views it as a key pillar of his cabinet’s structural reform plans.

But it is still an open question whether the public corporation will truly be turned into a private firm in the future. Some lawmakers within Koizumi’s Liberal Democratic Party are staunchly against doing so.