Eastern Europe postal sector 'ripe for growth'

Austria’s post office yesterday forecast huge growth potential in eastern Europe as state-owned incumbents are sold and markets opened to new services.

Anton Wais, chief executive of the group itself due to be privatised next month, said Osterreichische Post expected to follow the example of other big Austrian companies in expanding in the region.

Austria’s banks are among the market leaders in central and eastern Europe after having spotted the market potential early.

Mr Wais, who has pushed through a tough restructuring at the once barely profitable postal group since being appointed in 1999, admitted opportunities for big takeovers would be limited in the short term. That was because proceeds from his company’s initial public offering – only the third privatisation of an incumbent postal operator in western Europe after the Netherlands and Germany – would flow to the Austrian state rather than the post office itself. Mr Wais also acknowledged sales of incumbent postal groups in central and eastern Europe were still some way off in many countries for political reasons.

“The privatisation process hasn’t started,” he said. “I think it will. But it will probably be different in each case. It’s a highly political issue.”

He forecast that the Austrian post’s own privatisation, expected next month, would give the company essential access to the equity markets to provide an acquisition currency and financial firepower through rights issues.

“Privatisation will open the door for us. Every additional opportunity for access to new capital is an advantage,” he said.

Among future growth areas in neighbouring countries tipped by Mr Wais were direct mail and parcel delivery. His group is already number two in parcels in Croatia and Slovakia behind the incumbent state operator, and is the leading direct mail company in Hungary.

The Austrian post’s IPO of a 49 per cent stake, being led by Goldman Sachs, is expected around mid-May at a price of about Euros 15-Euros 20 a share. The deal will value the group at about Euros 1bn-Euros 1.4bn (Dollars 1.72bn).

The group’s performance has improved sharply in the past two years. Net profits almost doubled to Euros 99.9m in 2005 on a 2.9 per cent rise in sales to Euros 1.7bn. Operating profits climbed by nearly 32 per cent to Euros 100.9m.