2003 Operating Loss of €42.9 million

29 April 2004

The annual report and accounts, published today, show that turnover in the year 2003 increased by €25m to €701m but costs rose by €51m to €752m resulting in a third successive year of losses.

Payroll costs in 2003 totalled €501m, an increase of 4.5 per cent over the previous year. The loss in the financial year fell from €70.5m in 2002 to €30m in 2003, notwithstanding the increase of €25.5m in the operating loss. This improvement was due principally to the positive year-on-year movement of €65.8m in the exceptional items.

The report says that the third successive year of worsening operating losses is in line with revised forecasts prepared in September and is due mainly to slowing growth in mail volumes, continuing problems at SDS and an inability to realise previously negotiated savings.

The company points out those particular difficulties were experienced by its mail business and by SDS, the parcel distribution and courier business. The mail activities were hit by slowing growth in volumes, a delayed price increase and a failure to implement agreed savings.

On SDS, the report says that serious problems still persist despite shedding 114 jobs, exiting unprofitable services and introducing an owner/driver operation in a bid to transform the business model. Post Office Operations, which provides money transmission and personal financial services, performed relatively well.

Ms Margaret McGinley, chairperson of the Board of An Post, acknowledged that serious problems had emerged during the year when it became clear that the Company would not meet its original budget forecast to stem the losses in 2003 and return to profitability in 2004.

“The scale of the problem is set out in the Strategic Recovery Plan which was approved by the Board in September last and presented to the Minister for Communications, Marine and Natural Resources. It was also communicated to staff and trade unions.

“The measures in the Recovery Plan are predicated on the Company implementing an agenda for radical change. That includes new arrangements for collection and delivery of mail, staff reductions and achieving savings,” she said.

Another loss is anticipated in 2004, but breakeven is forecast in 2005 through the reduction of costs across all operations, the deployment of technology and achieving savings already paid for and further savings currently being negotiated.

Chief executive Donal Curtin says that An Post remains on a “financial knife-edge.” The overwhelming imperative for An Post was to reduce its overall costs and achieve revenue growth in line with projections, he said.

“We simply must become more efficient in how we organise our businesses and conduct our affairs. The evidence for urgent, real change is stark and this essential change cannot be further delayed,” Mr Curtin added.
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