An Post reports €5.7m operating profit for 2009
29 April 2010
An Post has reported an operating profit of €5.7 million for 2009 on a turnover of €804.2m, down 5.4 per cent (€45.8m) from €850m in 2008, mainly due to a 10 per cent fall in traditional mail volumes, mitigated somewhat by an increase in retail revenue.
Operating costs were reduced by €20.3m to €798.5m and the Company continued its investment in its Transformation Programme and the development of new revenue streams across the business.
Speaking at the GPO, An Post Chief Executive Donal Connell said that 2009 was a very difficult year for An Post’s customers: “This was reflected in a significant downturn in mail volumes and revenues and we worked with our staff and suppliers to achieve immediate cost savings in all areas. Despite very challenging trading conditions, we continued to invest in those parts of the business that will secure a profitable future for An Post in an increasingly competitive market.”
An Post’s retail business performed strongly throughout the year with demand for post office-based financial services driving high levels of growth. Customers invested an additional €1.8 billion in State Savings products operated by the Company on behalf of the National Treasury Management Agency. This product range will expand shortly with the introduction of the National Solidarity Bond which will be sold through An Post.
The Chief Executive reiterated the Company’s strategic commitment to broadening its revenue base by expanding its range of products and services: “Postfone, a new value-for-money mobile phone service will be launched next month through the post office network and several new financial services and mails products will come to market this year,” he said.
Earlier this year An Post and its partner BNP Paribas made the difficult but prudent commercial decision to wind-down the Postbank joint venture. Following on from this, the One Direct (insurance) and PostPoint (e-top up and payments) businesses will revert to being wholly owned by An Post.
Work already undertaken in preparation for full market opening in January 2011 enabled reductions in pay and non-pay costs including a reduction of 402 in Full Time Employee Equivalent (FTEs) staffing levels. Capital Expenditure of €51.4m reflected significant investment in buildings, equipment and the mails transport fleet while the strong cash position (€290m) enables ongoing investment in the business infrastructure. An Post has no bank or other borrowings.
The Group loss before taxation of €25.6m resulted from reduced operating profits, a FRS17 pension-related charge of €20.5m and Postbank losses of €10.6m. The pension-related charge is based on the decline in asset values in the Company’s pension fund in 2008. As a result of the fund’s improved performance, this charge is expected to be approximately €5m this year. (See Editor’s Notes).
As is the case with most defined benefit pension funds, An Post’s scheme falls well short of meeting the necessary Minimum Funding Standard, despite its deficit reducing to €403m last year from €582m in 2008. The Company is working with the Trustees and employee representatives on the development of an agreed plan to address this situation.
Quality of Service for mails delivery improved for the third consecutive year. 84 per cent of domestic mail achieved next day delivery, an increase of five percentage points on 2008 as a result of the company-wide focus on driving sustained improvement through collections, processing and delivery operations. International mail targets were consistently met and exceeded for incoming and outgoing mail.
Commenting on An Post’s acquisitions last year, Mr Connell said “Our focus remains firmly on extending our revenue base and last year we purchased a majority shareholding in the Gift Voucher Shop which trades very successfully in Ireland. It is now investing heavily in the UK following the signing of an exclusive distribution agreement with the British Post Office. Also, our wholly owned and strongly performing UK subsidiary, Air Business, acquired a key competitor, Jordan and Co International Ltd., which will allow it to further grow its mails fulfilment and distribution revenue,” he added.
‘We are aggressively addressing the economic downturn and the challenges of the fully liberalised mails market. We are further improving our offering to mails customers and promoting the use of mail to Irish business, particularly the SME sector. A key part of our strategy, under the ‘Do More’ banner, is to enable businesses to make better use of mail and to have it work harder for them in this period of national economic recovery,” he added.
An Post Chairman John Fitzgerald said that An Post has shown its ability to withstand the difficulties of what was its most commercially challenging year ever: “An Post is responding to the challenges and opportunities presented by the economic downturn. We are tackling falling mail volumes and changing mail formats by being the nation’s leading supplier of high quality, low cost mails and retail services. This focus on cost efficiency and the determination to build upon the service improvements already made bode well for An Post in the coming years,” he added.
As the rate of mails volume decline stabilises and with many sectors becoming more commercially active, volume is expected to contract by a further 4% this year. In order to realign the Company structure with the changing size and demands of the business, An Post last year announced that it was necessary to reduce staffing levels by 1,375 FTEs by end of 2012 through ongoing processes including voluntary severance and early retirement.
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Issued by An Post Corporate Communications, GPO, Dublin 1
Media contact:
Anna McHugh Head of Corporate Communications, An Post Tel: (01) 705 8832 / 086 2530697
Editor’s notes:
FRS 17 Pension Related Charge - In line with Generally Accepted Accounting Principles (GAAP) this charge is based on the value of the An Post Pension Fund assets at the end of 2008, the year in which they declined most severely. This €20.5m non-cash charge represented an adverse swing of €38.9m in the below-the-line FRS 17 accounting charge, compared to the prior year. This is expected to reduce to approximately €5m this year as a result of the fund’s improved performance in 2009.
FTEs (Full-Time Equivalents): The total of Part-time, casual and full time Staffing plus Overtime hours expressed as units of full-time staff.
