Cost containment and asset disposal yields €40.7m An Post profit

27 April 2006

This is the second successive year in which profits have been achieved on the back of significant cost containment and improved cash reserves.

The annual report and accounts published today shows an operating profit of €16.2m, up from €1.8m on 2004. A provision of €40m was made towards restructuring costs arising from the major Collection and Delivery Change programme agreed late last year with the company’s main trade union, the Communications Workers’ Union.

Consolidation of the financial discipline first brought to bear on the company from late 2004 was achieved through determined pursuit of the goals laid out in the Strategic Recovery Programme, in particular management of the An Post’s operational cost base.

Operating Costs decreased for the second successive year, down €16.5m to €736.7m. Payment of the full terms of the Sustaining Progress Agreement added €38m to payroll costs.   Overall labour costs continued to be closely managed in 2005 through tight control of overtime and recruitment as well as the reintegration of the SDS parcels operation back into the mails operation.  

 

The SDS rationalisation is producing savings of more than €10m per annum and the business is now operating profitably and growth plans are being exceeded.

An Post Chairperson, Ms Margaret McGinley, said that the key strategic objective over the past three years had been to return the company to financial stability:   
“We turned the corner on this in 2004 and further progress was made in consolidating and strengthening the position of the company in 2005. The current position represents a solid base on which we can build a sustainable future with a degree of confidence and a depth of knowledge of the stark realities of the commercial environment in which An Post now operates. 

“We know only too well how even minimal slippage in revenue, cost control or change management can trigger a rapidly deteriorating financial crisis. It is crucial that all An Post’s stakeholders keep sight of the fundamental issues facing the company,” she added.

Highly significant progress was made during the second half of 2005 on the company’s financial services strategy.  Earlier this month An Post signed a Memorandum of Understanding with international financial services provider, Fortis, that will lead to the creation of a Joint Venture company providing financial services through An Post unrivalled retail network.

Mr Donal Curtin, An Post Chief Executive made particular mention of this development:
“I believe this gives An Post the opportunity to re-establish its relevance to the community it serves. The new banking venture will provide products and services that people want, not just now, but into the future through the post office network.  It will build on the trust that people have in An Post and will make it relevant to a younger and more diverse Ireland.”

Please contact the Press Office for further information.

Notes to editors:

Cost –reduction summary 2002 – 2005:

                                2002            2005
Non-pay costs           €201.6m       €186.2m
Core Pay costs          €461m         €487m (despite
                                                   €85m cost of
                                                   Sustaining Progress)
Reduction in               12,578        11,296
staff numbers
(FTEs)