An Post Returns to Growth and Profit in 2017

An Post has released its 2017 results following their approval by Cabinet this week.

  • Revenue of €840m, up 1.2% on 2016
  • Profit of €8.4m vs 2016 loss of €12.4m and forecast loss of €61m
  • Profit before taxation of €49.6m (€15.7m loss in 2016) includes property sale
  • Relaunched parcel service delivers volumes up 30% on prior year
  • Restructuring reduces headcount by 333 FTEs (Q1 2018)
  • Cost-oriented pricing restored with €1 stamp, and breakthrough international ‘Terminal Dues’ Agreement

The Company has seen a substantial turnaround as it returns to profitability and growth in 2017.  The mid-year price increase to a €1 stamp, and massively increased parcel volumes offset traditional mail volume decline from e-substitution bringing revenue back to 2008 levels.

With a loss of €12.4m in 2016, New Era and PWC had forecast losses of €61m for An Post in 2017 if radical action were not taken. The mid-year price increases (20% average increase) combined with a reduction in costs and increased parcel revenues delivered a profit of €8.4m in 2017. Including gains from the sale of Cardiff Lane and a refinancing dividend from Premier Lotteries Ireland DAC of €9m, An Post had a profit before taxation of €49.6m in 2017.

An Post also undertook a major strategy review with McKinsey & Co which sees the company split into its two major businesses, the Mails & Parcels Service and the Post Office Network. As part of the restructuring, the management team has been reduced from 11 to 6 executives.

Highlights of the year include the relaunched and redesigned parcels service, resulting from a close collaboration between management and the Communications Workers’ Union (CWU). The extension of the delivery service to Saturdays and late-night cut-offs has allowed An Post to regain significant share of the burgeoning parcels market and achieve 30% year-on year volume growth. An Post is rapidly growing share with key UK and international e-commerce brands as a trusted partner for both the shipper and the shopper.

The exceptional stamp price increase in April 2017 brought An Post up to the EU average stamp price. The 38% headline increase (20% average increase across all products) saw mail volume decline run-rate go from -7% (prior to increase) to -9.5%, a more favourable outcome than econometric modelling suggested. The introduction of GDPR has emphasised the security and reliability of physical mail.

In December 2017 An Post achieved a breakthrough agreement on Terminal Dues (the amount European postal companies pay An Post for delivering their mail in Ireland) which is worth €6m in 2018, rising to €10m in 2020.

Also at the year-end the Mails & Parcels business restructured its network to reduce headcount by 316 FTEs (completed in Q1 2018), bringing the total reduction by Q1 2018 of 333 FTEs. Further efficiencies will be achieved in reduced overhead and with increasing automation of the parcels’ operation.

The Retail business was established at the year-end, encompassing Post Offices, Post Insurance, BillPay, and State Savings operations. The Retail team is engaged in a major plan for the renewal and reinvention of the Network, expanding the range of financial products, Government services and e-commerce (parcels).

Commenting on 2017 results, An Post CEO David McRedmond said:

"An Post has achieved a substantial turnaround of its business to move back into growth and profit. With the restructuring into two core businesses, the reinvigoration of management, the collaboration with the staff and Unions, especially the CWU, and the backing of Government, the future is bright.  An Post is the enabler of e-commerce, and will play an increasingly important role partnering the digital economy."

Source: An Post

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