Japan Post aims to turn around loss-making mail business

Japan Post, a public corporation created in April, intends to redouble efforts to turn around the loss-making mail service it inherited from the government.

The mail service division of the country’s postal service incurred a loss of 22.5 billion yen in fiscal 2002 ended in March, after posting an 8-billion-yen profit the previous year, as it failed to cover a drop in mail delivery revenues with cost cuts.

Under an action plan adopted in May, Japan Post is reducing its payroll while launching a new cut-rate parcel service in a bid to meet its profit target of 1.4 billion yen for fiscal 2003 and 12.6 billion yen for fiscal 2004.

But in view of continued falls in the amount of mail deliveries amid the spread of e-mail use and intensifying competition from private-sector parcel delivery service providers, Japan Post needs to step up rationalization, a posts ministry official said.

Japan Post also faces an urgent need to enhance the asset management record of its “Yucho” postal savings and “Kampo” postal insurance businesses.

At the end of March, the two businesses logged a combined latent loss of 9,028.1 billion yen in asset management through “shiteitan” designated money trust accounts for independent management, in which trust banks manage part of Yucho and Kampo funds on behalf of the postal agency. The loss is 60 pct larger than a year before.

The first challenge is to strengthen the ability to manage price fluctuation risks in the stock and bond markets, observers say.