Russian Post moves into the black with profit in 2008

The company expects a net profit of EUR 11.59 million in 2008.

Russian Post is set to end years of losses with a small profit in 2008, according to CEO Andrej Kazmin.

The company expects a net profit of EUR 11.59 million in 2008 against a net loss of RUB 4 billion EUR 115.86 million in 2007 thanks to its three-year programme to reduce losses and to modernise infrastructure and services, he announced at the recent UBS investment conference in Moscow.

The state-owned postal operator anticipates revenues of RUB 78.6 billion (EUR 2.28 billion) in 2008 compared to RUB 69.7 billion (EUR 2.02 billion) in 2007. According to forecasts, revenues from financial services are likely to grow by 25 pct to RUB 39.5 billion (EUR 1.14 billion) while mail revenues are estimated to increase by 29 pct to RUB 4.2 billion (EUR 121.65 million) in 2008 compared to 2007.

The CEO, a former bank executive, attributes the progress largely to the start of the implementation of the company’s modernisation programme this year. It includes the reduction of expenses through more savings and cost optimisation, improving management systems, reducing risks, controlling the quality of the services provided, increasing efficiency of business processes and developing new and profitable services.

Kazmin emphasized, however, that the state-owned national postal operator is currently in a difficult financial situation despite its growing range of services, more than 40,000 postal offices countrywide and its developed logistics network. Unresolved problems from the last few decades had resulted in a lack of investment in basic equipment and technology. Moreover, increasing postal prices remains difficult, Kazmin explained. “Postal tariffs change with a greater delay than the tariffs for air and rail,” he commented.

In a next step, Russian Post plans to renew its material and technical base including the reconstruction and renovation of its postal offices as well as to purchase a new fleet along with rail transport. Furthermore, also on the top of the agenda are the development of the company’s IT infrastructure and the integrated automation of production processes, the modernisation of customer service infrastructure and financial services in particular, and additional professional training.