CEO interview – Croatian Post invests in modernisation and CSR

Croatian Post (Hrvatska Posta) is investing heavily in modernisation, digitalisation and corporate social responsibility (CSR) for continued profitable growth in the coming years, CEO Ivan Čulo told CEP-Research in an exclusive interview.

The postal operator has remained financially stable and continued to serve Croatian society throughout “the unprecedented crisis” of the Covid-19 pandemic, he stressed in wide-ranging remarks following various recent achievements.

Big investments

Under its ‘Post2022’ strategy, Croatian Post officially completed its biggest ever investment cycle, worth HRK 1 billion (€130 million), in early March with the opening of the HRK 60m Kukuljanovo sorting centre, about 10km from the coastal city of Rijeka. This 4,200 sqm facility, with 300 workers, is the fourth and final new state-of-the art sorting facility, following those in Zadar, Osijek and its biggest facility at Velika Gorica (near Zagreb).

Speaking at the opening of the Kukuljanovo facility, Čulo declared: "I am proud that today we stand alongside the most successful and greatest post offices not only in Europe, but also in the world. We have also been recognised by a number of global companies with whom we are building partnerships, and I would definitely single out Amazon, Zalando and About You. Every day we deliver tens of thousands of packages for them."

Sustainability actions

Last month, Croatian Post also stepped up its CSR activities by joining The Climate Pledge initiative. Signatories to this international initiative commit to implementing decarbonisation programmes (avoiding, reducing and offsetting CO2 emissions) in order to reach net-zero CO2 emissions by 2040.

In parallel, the postal operator has so far installed more than 150 out of a planned 300 parcel lockers across the country under a cooperation partnership with Omniva. Deliveries to parcel lockers and expansion of its electric vehicles fleet will help the company to reduce its CO2 footprint over the coming years.

Against the background of these activities, Čulo took time to respond to questions from CEP-Research about the company’s strategy, experiences during the pandemic, and plans for the coming years.

How has Croatian Post got through the pandemic? What are the main lessons learned?

“There is an apocryphal Chinese curse “May you live in interesting times”. We live in an unprecedented crisis which changed the entire world and we, personally and professionally, had to adapt quickly to the new circumstances. Many industries suffered greatly during the pandemic, but all postal operators continued to offer their services and saw tremendous growth in both number and volumes of parcels.

“Our business operations never stopped, and we continued to connect people, businesses, and countries. Fortunately, we have already built strong business foundations before the pandemic happened, so we were quite ready for all the challenges. Companies that were undergoing an investment cycle were much more prepared and even came out of the crisis stronger.”

How did Croatian Post perform financially in 2021?

“Our financial results have been stable. We finished the year with around €6.5 million net profit and EBITDA of €22.9 million, with an EBITDA margin of 10.1%.

“Our investments have reached more than €17 million and our parcel volumes were 15% higher compared to the previous year. I would like to emphasise that in 2021 we have paid almost €17 million in rewards to operational workers.”

What is Croatian Post’s overall strategy?

“Two core philosophies of our strategy are digitalization and corporate social responsibility. Our Development Strategy Post2022 defines three directions of development. We are developing our core business by improving our processes and introducing innovations. We are promoting excellence by developing our employees’ skills and competences, and we are developing our logistics through new market penetration.”

What are your main priorities for 2022, strategically, commercially and operationally?

“Croatian Post implemented its biggest investment cycle in the company’s history. We have invested in infrastructure, technology, digitalization, processes, and people. The biggest priority was to transform the Croatian Post into a modern logistics company, fit for modern logistics market and all the challenges of the ever-changing business environment.

“In September 2019 we opened the New Sorting Centre which was the largest business investment in Croatian Post’s history. Our parcel sorting machine can sort up to 15,000 items per hour and we can sort around 23,0000 letters per hour, which proved to be sufficient even with higher parcel volumes.

“We also invested in the parcel locker network. A total of 300 parcel lockers will be placed throughout urban and vibrant areas in Croatia. Croatian Post’s partner in implementing parcel machine technology is Estonian Post, and half of the parcel lockers are already operational.

How will your recent investments make the post fit for the future?

“With the biggest investment cycle in Croatian Post’s history we created the necessary prerequisites to become the most successful postal operator in the region. Now we can concentrate our efforts on building a better user experience and transforming the way people interact with their Post.

Why has Croatian Post joined The Climate Pledge Initiative?

“It is no longer enough to just achieve growth. We need to think about the future and our impact on environment and all stakeholders. Croatian Post is recognised as one of the leaders in digital transformation in Croatia and now we are working hard to become a bright example of corporate social responsibility. Joining the Climate Pledge is an opportunity to redefine our business model and create a better world for all of us.”