An Post back in the black, as cost-cutting programme hits targets

Ireland’s An Post returned to the black last year, thanks to cost-cutting efforts and growth in its parcels business. The state-owned national postal service said it turned around the EUR 11.4m loss seen in 2013 into a EUR 5.9m profit for the 2014 year.

Revenue grew by 1.1% to EUR 820.6m for the year, while the company’s operating costs fell by 1% to EUR 814.7m.

An Post said its universal service obligation continued to make a loss, but the year’s EUR 38m loss was “significantly” down on the EUR 55m loss incurred in 2013.

Traditional letter volumes fell by 3.3% year-on-year during 2014, but the company’s domestic parcels and packets volumes grew by 6%.

Mails revenues grew 2% year-on-year to EUR 521m, with retail revenue down slightly on 2013 at EUR 167m, with other Group products and services similar to 2013 at EUR 119m.

Donal Connell, the An Post chief executive, said his company had made “significant progress” during 2014, but that the company had to continue to adapt to the “well established” decline in mail volumes, including addressing staff numbers.

“Government policy in relation to the role of the Post Office will be an important determinant of strategy in the coming years,” Connell said. “While we continue to invest in aspects of the business that have the potential to generate revenue, the retail network faces many challenges including significant price pressure on bill payment revenues, competition from alternative payment networks and that low growth-potential of current Government business.

“As we have said before, we believe that An Post has a key role to play in the provision of a Basic Bank Account, in the context of financial inclusion,” he added.

Transformation

During the year, An Post completed its EUR 40m Mails Automation Programmme, and achieved the targets in its cost reduction programme, which did include the loss of 217 jobs across the core company.

An Post said it achieved its quality of service targets, and agreed a new Mails Price Cap to provide more certainty on pricing. Prices went up 13% in July 2014 to help counter “unsustainable” losses in the letters business. The year also saw An Post settling a long-running legal dispute with regulator ComReg regarding failed service quality targets.

During 2014 the company transferred five of its 57 owned post offices to be operated by contractors, while 18 out of post office contracts that became vacant were renewed, taking the overall network to 1,140 outlets compared to the 1,147 in 2013.

An Post said it “substantially” refurbished or relocated 38 large post offices during the year.

The company is currently in the process of working with private sector firm Capita to introduce Ireland’s first post code system, the eircode.

Among other innovations, the company is piloting new “Post & Pay” facilities in its larger retail outlets, to help improve service quality in busier post offices.

Commenting on the year’s results, An Post chairman Christoph Mueller said his company remained focused on efficiency, productivity and innovation while looking to grow and reform the business.

“The shift in customer behaviour towards faster, cheaper and more convenient communication and transactions is driving the evolution of our postal and financial services,” he said.

“Our five year plan is based on continuing to innovate in the provision of new products and services, optimising our Quality of Service, improving cost competitiveness as well as continued employee engagement.”