Russian Post is set to end years of losses with a small profit in 2008, according to CEO AndrejKazmin.
The company expects a net profit of RUB 400 million (€11.59 million) in 2008 against a netloss of RUB 4 billion (€115.86 million) in 2007 thanks to its three-year programme to reduce lossesand to modernise infrastructure and services, he announced at the recent UBS investment conferencein Moscow.
The state-owned postal operator anticipates revenues of RUB 78.6 billion (€2.28 billion) in2008 compared to RUB 69.7 billion (€2.02 billion) in 2007. According to forecasts, revenues fromfinancial services are likely to grow by 25% to RUB 39.5 billion (€1.14 billion) while mailrevenues are estimated to increase by 29% to RUB 4.2 billion (€121.65 million) in 2008 compared to2007.
Kazmin said: “According to the preliminary results, we have managed to generate growth of thecompany’s net assets in 2008 compared to the previous year and considerably decrease our foreignliabilities – all this gives us reason to hope that by the end of the year Russian Post willconsiderably improve its financial indicators. But it is a bit early, though, to speak about stabledevelopment of the company.”
The CEO, a former bank executive, attributes the progress largely to the start of theimplementation of the company’s modernisation programme this year. It includes the reduction ofexpenses through more savings and cost optimisation, improving management systems, reducing risks,controlling the quality of the services provided, increasing efficiency of business processes anddeveloping new and profitable services.
Kazmin emphasized, however, that the state-owned national postal operator is currently in adifficult financial situation despite its growing range of services, more than 40,000 postaloffices countrywide and its developed logistics network. Unresolved problems from the last fewdecades 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 greaterdelay than the tariffs for air and rail,” he commented.
In a next step, Russian Post plans to renew its material and technical base including thereconstruction and renovation of its postal offices as well as to purchase a new fleet along withrail transport. Furthermore, also on the top of the agenda are the development of the company’s ITinfrastructure and the integrated automation of production processes, the modernisation of customerservice infrastructure and financial services in particular, and additional professional training.
In the second quarter of 2009, a new automated sorting centre is to be put into operation inMoscow, and in the beginning of 2010 another one is due to start operating in St. Petersburg.However, the investment programme of the company has to be reviewed. “Some things we will have todo without,” Kazmin concluded. Similar to other infrastructural network, the postal operator is inurgent need of investment, he added.
