Russian Post CEO Andrej Kazmin resigns

Russian Post CEO Andrej Kazmin resigned after only one year in the job after the financial crisis thwarted his plans to create a post office banking system and despite his successes in bringing the company into profit and starting modernisation measures. His successor could be a former DHL Russia manager.

Russian Post issued a statement on January 12 saying that Kazmin would step down from his post on January 14, 2009 in order to transfer to another company. The final decision about Kazmin’s resignation, according to Russian media, was taken by the company’s management and Kazmin himself had not intended to leave.

According to the Russian news agency RIA Novosti, there have been rumours going on since last autumn about Kazmin leaving the company. These followed the outbreak of the financial crisis in Russia which prevented the implementation of the major project to use the postal branch network to offer financial and banking services.

Kazmin, who had been the head of Russian savings bank Sberbank for more than ten years, was thus unable to achieve the goal of fully upgrading the financial and banking system of the postal operator. That is reportedly what former president and current prime minister Vladimir Putin expected from him and the main reason why he was hired.

Executive vice-president of Russian Post Andrei Manoilo will temporarily replace Kazmin until the new head of the company is determined. Russian Post will issue a tender for the vacancy with a final result expected in two months.

Alexander Kiselev, the current CEO of Svyazinvest, a global telecommunications investment company, is considered one of the main candidates for Kazmin’s position. Kiselev is very familiar with the postal industry as he worked at DHL International from 1991 until 1995. In 2000, he was appointed Deputy Minister of Communications, including responsibility for postal services.

Leonid Slipchenko, Senior Analyst at Uralsib, one of the largest national banks, commented on the possible reasons for Kazmin’s resignation: “The financial crisis might have disturbed the implementation of such a significant project which has become costly and risky for the government against the background of worsening economic conditions. As a result, Kazmin didn’t manage to allocate sufficient financial means that were necessary for the development of Russian Post and had to leave due to the lack of growth opportunities.”

Kazmin did succeed in some areas at Russian Post over the last year, however. He developed a medium-term modernisation programme for the period until 2011 designed to upgrade the company’s infrastructure and services including a diversified banking infrastructure. He nearly obtained RUB 209 bn (€5 billion) for the modernisation plan but government approval was prevented by the financial crisis.

Moreover, for the first time in several years, Russian Post ended the financial year with a small net profit of about RUB 137m (€3.27m), putting an end to the growing losses during the past two years. The operational profit increased by 25%. Above all, Kazmin managed to reduce operational costs by 12% through strict economy measures, and reduced debts from RUB 2.8bn (€66.91m) to RUB 2.2bn (€52.57m).

In a recent interview with national newspaper Vedomosti, he said: “The main result of our work is that the Post has escaped from the dangerous line it was close to at the beginning of the year. This result has been achieved thanks to the realisation of anti-recessionary measures including strict control of the budgeting among others. However, economising rigorously creates obstacles for the efficient development of Russian Post. Therefore, plans for 2009 comprise financing modernisation projects of the company.”

In 2008, Russian Post continued expanding its services. Delivery of mail, parcels and EMS recorded the highest growth compared to other services. In 2009, some of the company’s top priorities are maintaining its break-even, increasing investments as well as developing and implementing standard technological solutions. Two automated sorting centres are due to be opened and technology for accepting, handling, transporting and delivering shipments will be modernised.