Spain’s Correos to seek growth in non-core business areas
Spain’s national postal service Correos is about to embark on a major effort to diversify its portfolio of services, according to its new president Javier Cuesta. Cuesta, who took over at Correos in March, spoke at the World Mail and Express Europe conference, which concluded today in Geneva.
Discussing his company’s reaction to the difficult economic situation at the moment in Spain, Cuesta said Correos was essentially still a “letter handling company”, with one of the highest proportions of its revenue stemming from traditional postal services of any major postal operator in Europe.
Correos currently receives about 85% of its revenue from postal services, 15% from parcels. The company has an 86% share of the Spanish mail market and a 7.5% share of the domestic parcels market, with most parcels delivered by private sector express operators in Spain.
Correos saw its sales declining 8.9% in 2011 compared to the year before, as the firm recorded a EUR 164.4m loss. Mail volumes have dropped nearly 25% since 2007, in a country that already has one of the lowest per-capita mail volumes in Europe. This year, with aggressive moves by private sector competitors to expand in a liberalised postal market, and ongoing competition from the Internet, mail volumes are forecast to reduce 5%.
Cuesta said this week that his strategy for the company was now to improve efficiency of operations – including as much as a 25% reduction in the work force – invest in parcel services and branch out into new non-core services.
This is set to include new digital services including hybrid mail services, online mail capabilities like a “virtual post office” and support for ecommerce companies, including a move into fulfillment activities.
And, Cuesta said Correos would be looking again at providing more financial services, having sold its postal banking business to Spain’s 2nd largest bank, BBVA, in the late 1990s.
“We do have some financial services now in partnership with Deutsche Bank, but it is a very marginal presence,” Cuesta said. “But, I think we will work on this in the next year.”
The interest in financial services come as some other European posts have been doing very well in this area, including the likes of Poste Italiane and La Poste, generating non-postal revenue as core mail revenues decline.
Core mail services
While there was some optimism at this week’s World Mail and Express conference about the prospective growth in direct mail in Europe, helping to stabilise mail volumes to some degree, Cuesta said that in Spain the tough national data protection laws have rendered the direct mail market highly restricted.
A new project to put together a national address database is on the cards, which Cuesta said would help with direct mail services to some extent, but the government is currently sitting on its hands with respect to its development, and the Correos president told Post&Parcel that there was no clue when it might move forward.
“The postal law of December 2010 says that the address census has to be developed, but we do not see the government moving forward with it,” he explained.
“Not much can be done about the data protection law, but the national address database would help direct mail, but we’re not sure when the government will implement it.”
