Surprise profits of EUR16m at Irish An Post
A DRAMATIC turnaround in the fortunes of An Post will be announced later this week. Figures revealed to the Sunday Independent will show that the troubled semi-state firm made an operating profit of 16m in 2005.
The surprise profits are due to be presented to the Cabinet at its first post-Easter meeting this week. They compare very favourably with a 1.8m operating profit in 2004 and with a loss of 43m in 2003.
The figures represent a considerable success for Donal Curtin, the company's chief executive, who is leaving An Post in June.
Mr Curtin took over the company at a time of serious industrial relations problems and severe losses, but will leave it in a relatively healthy financial condition.
An Post is also set to report once-off profits of 60m from the sales of its etop-up companies in Spain and the United Kingdom. Some 40m of the proceeds of these sales have been put aside for An Post's voluntary redundancy programmes.
The bumper profits from An Post have been achieved partly by cutting operating costs from 753m to 736m, making savings of 17m. The company has made non-payroll savings of over 15m, much of it due to the sale and reintegration of its SDS parcels division on the Naas Road, Dublin.
An Post ended the year with 185m in cash compared with a liquidity crisis back in 2003 when it was forced to sell property in Cork to raise funds in a hurry.
Despite the turnaround political sources insisted last night that the future of the company remained fragile. One insider said that the forthcoming national pay deal could cost An Post 20m annually and wipe out its profits.
About 70 per cent of An Post's overheads are made up of labour costs. Under the terms of the last partnership pay deal, An Post invoked the "inability to pay" clause.
The move came in the middle of serious industrial conflict at the company; at the end of the day, the pay deal was honoured and the trades unions agreed to changes in work practices which gave the company 52m in savings.
An Post is still pursuing its application for an increase in the price of the domestic stamp, a hike vetoed by the Communications Regulator last year. The company is seeking a rise from its current level of 48 to 60 and is taking legal action against Comreg for its refusal to sanction the rise.
First-class service as costs package delivers 40m profit
European Intelligence Wire 04-29-2006
NEWSMAKER: DONAL CURTIN, AN POST CHIEF EXECUTIVE
DONAL Curtin, the outgoing chief executive of An Post, will probably be remembered for turning the greatest basket case in the semi-state sector into a profitable company with substantial cash reserves. It's always good to leave a job on a high and this week, only a few months before he is due to step down, Mr Curtin reported an after-tax profit of 40.7m for 2005.
Contrast this to 2003 when, only six weeks after joining the company, Mr Curtin found that rather than making a 1m profit for that year, as his predecessor John Hynes had predicted, An Post was on target to lose approximately 50m.
As it turned out, the company lost only 43m – but that was partly because of emergency remedial action which Mr Curtin and his team put in place.
Pay increases
The former ESB executive's focus was on controlling costs. Operating costs, which stood at 752m when he took over, fell to 736m last year. This includes pay increases due under the national agreement which added 38m to the cost base last year.
Some 10m of those cost reductions came from closing down SDS, An Post's loss-making parcel subsidiary which has now been integrated into the core business. Much of the cost saving, however, came from staff reductions, a process which involved tackling the trade unions head-on.
The problem was not just that An Post had too many employees, but outdated work practices meant that many employees were raking in extraordinary amounts of overtime pay.
At the beginning of 2004, An Post was paying for 20,000 hours of overtime to its 1,500 staff in Dublin alone.
One postman, who was on a basic of 23,000 a year, was able to get a further 57,000 a year in overtime in 2003. He was not alone. In all, 226 An Post employees on basics of less than 25,000 were able to earn over 50,000 in overtime that year.
Since taking over, Mr Curtin has cut the 17m overtime bill by one-third and has reduced the number of full-time equivalents – a way of measuring employee numbers which takes account of part-time staff – from 12,578 to 11,296 at the end of last year. The number of core staff has fallen from 9,416 to 8,966.
The numbers do not tell the whole story. According to the results, An Post had net funds of 185m, compared to a nil cash position when Mr Curtin took the helm. About 80m of this has been earmarked for a redundancy programme which Mr Curtin has already agreed with the unions.
It is understood that 1,100 collection and delivery staff have signed up for the voluntary redundancy scheme. The company had only planned to let 800 people go but may be tempted to increase this number, given the appetite for the redundancy package.
Mr Curtin has kept his future plans very much to himself. Friends say he has maintained a number of Irish and international business interests and is expected to devote more time to these. It is also said that he has little interest in taking up another post in the public sector.
On the question of succession, Government sources say that the only obvious replacement is Larry Donald – who is effectively Mr Curtin's second-in-command, having moved over from the ESB where he held the dual position of company secretary and director of corporate affairs.
Mr Donald is very well regarded within the public and private sectors and it is unlikely that any competitor can boast his experience, particularly when it comes to dealing with public-sector trade unions.
Tom McEnaney
