The Irish postal operator An Post recorded an operating loss of €17.5 million in 2012, especiallydue to continuously declining mail volumes, and now needs cut another 1,300 staff by 2016 but also
adjust mail prices and restructure its pension scheme.This is the first trading loss An Post has experienced since 2003. In 2011, it still recordeda profit of €2.2 million. But traditional mail volumes have been further declining by a further 5.2per cent since then due to a combination of the economic circumstances and a structural decline inpostal volumes in general, reflecting increased e-substitution. Another factor that impacted theresult was the delay in securing approval from the country’s regulator ComReg for an increase inthe standard letter rate.
An Post generated revenues of €807.3 million in 2012, marginally ahead of the previous year’s€806.7m. This was partly due to the revenue increase at its subsidiary companies to €111m (€80m in2011). These include One Direct and The Gift Voucher Shop performing very strongly in theirrespective markets and benefitting from the company’s ongoing investment and diversificationstrategy.
An Post CEO Donal Connell commented on the company’s operating loss: “The loss reported willbe addressed within the current five-year plan. While economic forces continue to be unhelpful, thecurrent strategy of ongoing cost reduction, maximising revenue-generating opportunities across theGroup and appropriate pricing adjustment to compensate for the full cost of providing the UniversalService Obligation (USO) will return An Post to acceptable profitability. It will also re-establishthe USO on a sustainable financial footing for the longer term benefit of the wider economy.”
He explained that the loss in operating the USO was over €60m last year and highlighted thenecessity for introducing an appropriate Price Cap Mechanism, linked to the Consumer Price Index “with an option/adjustment to incentivise efficient provision of services”. “It is essential tounderpin regular, fair and necessary price adjustments in the future.”
“Like postal operators across the globe, we continue to deal with declining core mailvolumes, increased electronic substitution and significant uncertainty in the general businessenvironment. Our experience reflects the ongoing difficulties being faced by our business customersacross almost all sectors – the trading environment continues to be most challenging,” he added.
In terms of job cuts, An Post has reduced the number of employees by 1,284 since January2009, including 349 Full-Time Equivalent (FTE) staff last year. These measures helped get thelabour costs down by €53.4 million. This is almost half of the total staff reduction of 2,600 FTEsacross all units of the company required by the strategic plan to be achieved by the end of 2016. “The phased achievement of this target continues to be a priority issue for management. Staffnumbers have increased slightly in the subsidiary companies, in line with budgeted growth andexpansion,” AnPost said in a statement. The ongoing Change programme has delivered savings of €100million in annualised operating costs since January 2009.
Despite the cost-cutting, An Post continued investments from its own resources last year whenthe installation of latest-generation mail processing technology was completed at its four nationalmail hubs. Money was also spent on real-time delivery verification equipment to all postal deliverystaff. An Post stressed that this investment has been important for a number of major internationalparcel contracts which have the potential to generate further business for the Irish economy.
The postal operator managed to reduce its pension deficit to €285m from €484m in 2011. “As itis the case with all defined benefit schemes, An Post has to address funding issues arising fromthe impact of the global financial crisis. A plan is currently being finalised which includeschanges which will enable the scheme to meet the requirements of the Minimum Funding Standard, aslaid down by legislation,” the company added.
