Crisis-hit An Post suffers €15.6m loss
Price rise of 20pc takes pressure off insolvency-threatened firm
An Post has continued its slide into the red as the volume of mail declines, posting a €15.6m pre-tax loss last year.
Releasing its annual report yesterday, it said revenue remained flat at €825.7m in 2016, but that costs rose 2.2pc. Its revenue figure benefited from what it said were "strong performances" by its subsidiaries, as well as general election mail, and a 3pc price increase.
An Post, headed by CEO David McRedmond, has been lumbering from crisis to crisis as its financial performance deteriorates. Mr McRedmond warned in April that the semi-state company was headed for insolvency and would be loss-making again in the next financial year unless urgent action was taken.
He told union members that the price increase it secured last month would only keep the group cash positive for a year. Without the price increase, the company was set to lose €50m this year, he said.
The company, which held its annual general meeting yesterday, said letter volumes fell 5.2pc last year, and that since 2007 letter volumes in Ireland have tumbled 40pc.
It said it incurred a €41.3m loss last year delivering its Universal Service Obligation, which is mandated by regulator ComReg.
An Post has been considering the closure of as many as 400 post offices around the country as well as shutting two temporary sorting centres in Dublin.
"The net cash balance of €26m at year-end (2016) was considered insufficient for the company's medium-term sustainability," An Post said yesterday. An application to ComReg for the removal of the regulatory price cap resulted in the company raising prices by 20pc on average last month.
"In the six weeks since the price increase, there has been no indication of any additional acceleration in mail volume decline," said the company.
An Post has worked with consultancy group McKinsey to develop a long-term strategy focused on its retail business, and mails and parcels unit. Each unit has a plan to close projected deficits by 2021.
"Over half of the deficit will be covered by pricing and product growth initiatives, with the remainder addressed through cost-cutting and downsizing initiatives," it said.
Mr McRedmond said An Post needs to change its "direction of travel" to survive.
"The digital world is closing one door with e-substitution of mails and online banking, while opening another into the world's largest industry of shopping through ecommerce," he said.
An Post also replaced KPMG with Deloitte as its auditor yesterday after a tender process.