Hungary's Post Office faces up to challenges from competition

Magyar Posta’s new chief executive has said it must push for efficiency and quality, while seeking revenues in new markets, to prepare for liberalisation of the postal market. Hungary’s postal market must open to competition from 2013 under European law, but László Geszti, who took over leadership at the Post Office at the start of this month, insisted competition “does not automatically mean loss of revenues”.

“Competition is transforming the market, but it is not necessarily going to take out the profit. We are considering it as a positive driving force for change – the new situation inspires us.”

A former CEO of Shell Hungary, Geszti previously spent eight months as president of the board of INA, the Croatian national oil company, resigning for health reasons in February 2010.

Known as a tough manager within INA, he faced a difficult time at the company, which has gone through a gradual process of privatisation over the past eight years, with ownership now split between the Croatian government and Hungary’s MOL Group.

His appointment at Magyar Posta comes following the departure of Pál Schmidt, with commentators in Hungary suggesting the move represents Hungary’s minister of national development, Thomas Fellegi, putting “his own man” in place to lead the much-needed transformation of the Post Office.

Along with the challenge from European postal liberalisation laws, Magyar Posta also recognises the significant threat posed by the move towards electronic forms of communication.

Speaking in an interview prepared for the media, Geszti said the postal industry was currently facing major challenges in its business model in the same way the oil industry has with regard to the emergence of alternative fuels.

“We had to successfully cope with a changing consumer-oriented world,” he said, “This is now the responsibility of the postal service as well – I think I can use this experience in the postal services market.”

Transformation

As big a challenge as the internet for Magyar Posta is the emergence of competition in its marketplace. There are fears that it will mean a significant loss of market share for Magyar Posta come 2013.

Geszti noted that the Hungarian Post Office has recently adopted a new business strategy to prepare for the opening up of the market, and said there were a number of strategies to keep Magyar Posta on track and maintain profitability.

“The Hungarian Post Office has already experienced many changes, so there is a wealth of collective experience and the ability to adapt to change,” he said.

“In its long history, there has been a really good tradition of trust in the company, but undoubtedly its efficiency has to go further.”

The new Magyar Posta CEO said he will lead a revival of the Post Office, reorganising it to work in new markets and ensure long-term success. Investment in processing infrastructure is under way to improve efficiency, with one of Geszti’s first public appearances as head of the Post Office coming earlier this month, when he opened a new international mail processing facility at Budapest Airport.

A new independent unit is being set up this month to run financial services, which Geszti said was seen as a particularly promising area for his company to make new revenues, benefiting from the unique infrastructure enjoyed by the Post Office in Hungary.

Geszti conceded there were public concerns about the future of the Post Office and the potential impacts of postal modernisation on postal workers.

“These concerns are rooted to the Post Office’s position in society, and the fact that we are a public company in a competitive market. Everyone is interested in peaceful transition. As the largest employer, our task is quite significant.”

Geszti said better productivity would be required from Magyar Posta employees to prepare for competition in the postal market, and that ensuring the Post is providing a quality service had to become a priority for staff.