South African postal service defies the crunch
SA Post Office expects to see another year of profitability, despite the economic crisis.
SA Post Office expects to see another year of profitability despite the economic crisis, says newly-appointed chief operating officer John Wentzel.
The organisation ends its fiscal year this month, and while it will show a severe decline, there will still be some profit to work with.
“Many of the postal operators we benchmark ourselves against will suffer losses,” Wentzel said. “The US postal service, for instance, showed a $384m loss last year.”
In its previous financial results, the post office recorded a 12% rise in pre-tax profit of R565m for the year ended March 2008.
It showed a 7% rise in revenue to R5.6bn, and while Wentzel anticipates a dip, he expects to keep the organisation above water.
Wentzel has been chief operating officer for only eight weeks and already feels the weight of his task — keeping the wheels on an organisation that was one of the worst-performing parastatals until a few years ago.
He feels confident though, having worked at Standard Bank, where he was IT director, as well as in various logistics, retail, operations and financial services positions at companies such as Tiger Brands, Unilever and SABMiller.
“I think I’ll be able to bring a focus of execution to this position, but the organisation has already been doing very well recently,” he said. “The people at [the post office] understand the value creation component of the business and have managed expenditure very well.”
In 2008 the organisation rolled out one million new residential addresses and boosted its commercial outlets to 2800 across the country.
This year the target is 100 more post offices along with ongoing innovation and product development.
The crisis has not left the post office unaffected, but it doesn’t foresee any loss of jobs, just better management of funds.
As far back as 2007, leaders at the organisation, high on newly acquired profitability, proclaimed that they would soon do away with the R330m government subsidy, but Wentzel was more realistic.
He said: “The subsidy allows us to fulfil our universal service obligation, and is strictly ring fenced. We only use it for those areas that wouldn’t be commercially viable for us.”
“Restriction in spending is significant. Ongoing operations are borne by non-subsidy funds and we often have to maintain con-commercial outlets with income from our commercial assets.”
He said the subsidy would likely be maintained at R330m, or even decreased, meaning a slowdown in its rollout of outlets. Wentzel wants to take the parastatal into the 21st century with a strong focus on electronic communications.”
“There are several areas where we’re under-represented. For instance, we’re seeing customer demand changing towards online and digital media,” he said.
