An Post reports €15.6m pre-tax loss for 2016
Ireland’s An Post has reported a €15.6m pre-tax loss for 2016. The postal operator said that its revenues of €825.7m were in line with the previous year’s €826.1m but its performance was hit by an increase in costs, which grew by €18.4m to €839.3m.
Letter volumes continued to decline, down 5.2% on 2015. According to An Post: “Since 2007, in line with global trends, letter volumes in Ireland have fallen by 40%. An Post incurred a loss of €41.3m in delivering its Universal Service Obligation in 2016 while Quality-of-Service measures showed An Post to be among the best postal services in Europe.”
Post Office revenue declined €2.5m on the prior year to €161.8m.
An Post said that the increasing losses have consumed its cash reserves and, as a consequence, it applied for the regulatory price-cap to be removed so prices could increase to fund the USO and “be in line with peer companies across Europe”. Prices were increased by 20% on average on 13 April and, according to An Post, so far “there has been no indication of any additional acceleration in mail volume decline”.
Basically, this move has given An Post some breathing space and room for manoeuvre.
“The projected yield from the price increase provides stability for 12-18 months when the Company will implement a new strategy to take advantage of global trends,” said An Post.
“Management has developed, with McKinsey & Company, a long-term strategy focused on two dedicated business units – the Retail Business, and Mails & Parcels – each with its own plan to close the projected deficits by 2021. Over half of the deficit will be covered by pricing and product growth initiatives, with the remainder addressed through cost-cutting and downsizing initiatives. Key growth areas include the burgeoning parcels market from increased online shopping; premium mail growth especially direct mail; and an increased range of financial products in the Retail business.”
An Post’s Chief Executive Officer, David McRedmond, commented: “The results for 2016 show that the direction of travel for An Post needs to change. The digital world is closing one door with e-substitution of mails and online banking, while opening another into the world’s largest industry of shopping through e-commerce.
“We will price our services appropriately and deliver the best-in-class service in both our Mails and Post Office businesses for customers throughout Ireland. Parcel delivery will be at the core of what we do to ensure that a customer in Ballina has the same global access to goods as a customer in Boston or Barcelona.
“I am confident that we have stabilised the immediate-term finances through the recent price adjustment, and done the detailed work to design sustainable strategies for both the Mails and Post Office businesses.”
