Russian Post ends years of losses with a small profit in 2008
Russian Post moved out of the red in 2008 for the first time in several years with a small pre-tax profit margin of 0.8%. Revenue grew by over 22%, with double-digit express and parcel volume increases.
Russian Post moved out of the red in 2008 for the first time in several years with a small pre-tax profit margin of 0.8%. Revenue grew by over 22%, with double-digit express and parcel volume increases.
The first step of the modernisation programme implemented by the former Russian Post CEO Andrej Kazmin has thus been accomplished with successful anti-recessionary measures, Russian Post said. The organisation has overcome the period of deep-rooted losses and worsening business indicators, and improved its financial stability and liquidity.
Profit before tax in 2008 amounted to RUB634m ($17.52m) compared to a loss of RUB4,039m ($113.88m) in 2007. The net profit for 2008 will be calculated after the company’s annual financial statement. Annual revenues increased by 22.4% to RUB86.6bn ($2.39bn). Revenue growth was driven to a large extent by the development of financial services with their share in the company’s revenue structure increasing to 43.1%.
In 2008, Russian Post handled a total of 1.67bn items compared to 1.52bn in 2007. Express Mail (EMS) experienced the highest growth with an increase of 44% (700,000 additional shipments). Parcel volumes also saw good growth with a 13.1% increase, or 6.3m additional shipments. Mail volumes rose 8.8% by 133m items with first class mail increasing by 40.8% which equals an increase of 1.8m items.
Pricing changes were an important factor contributing to the revenue growth, Russian Post said. Abolishing unjustified reductions, bringing the prices of certain operations to the market level, optimising the pricing structure all contributed to the 38% growth of non-regulated postal services. Regulated services grew by 21%. In addition, revenues from cost-effective operations enabled the postal operator to compensate for the losses of RUB5.9bn ($162.88m) from regulated services in 2008.
Another growth factor was the increased productivity and operational efficiency of the workforce, Russian Post said. The production capacity of one employee has increased by 24.6%. Without hiring any additional workers (currently 350,000 employees), the company’s volumes have grown considerably for almost all types of services, including mail, financial and commercial solutions.
The most important tasks for 2009 include standardisation of products and services, renewal of the fleet, the opening of automated sorting centres and further implementation of modern IT technologies in production processes.
This year, Russian Post plans to invest in development measures, executive vice-president Andrei Manoilo, who is temporarily leading the company, told the Russian news agency ITAR-Tass. Half of the investment is expected to be financed through long-term credits and involving strategic partners, he explained. About RUB2.8bn ($77.29m) will be spent on fleet upgrading.
In 2008, the organisation invested RUB5bn ($138.03m). About RUB2.5bn ($69.01 m) was dedicated to the construction of automated sorting centres in the Moscow region and St. Petersburg. The sorting centre in Moscow, constructed by Siemens, is planned to be put into operation in the first half of 2009.
