Losses continue at An Post, as revenue remains flat and costs increase
An Post has reported pre-tax losses of €15.6m in its 2016 annual report.
However revenues of €825.7m at the group were in line with the prior year due to a number of factors including strong performances by An Post’s subsidiary companies, general election mail revenue, and a 3pc price increase.
Costs at the company grew by €18.4m to €839.3m due to one-off costs and the impact of the Labour Court pay increase of 2.5pc, costing €8.9m in 2016, An Post said.
Letter volumes were down 5.2pc on the prior year and continue to be impacted by e-substitution.
Meanwhile post office revenue was down €2.5m on the prior year to €161.8m.
The increasing losses, principally from the decline in mail volumes have consumed An Post’s cash reserves, the company said.
However, the news was not all bad, with An Post experiencing growth from products such as PostFX, up 7pc, and banking transactions up 4.6pc, highlighting the potential for expanded financial services.
The An Post-managed State Savings products also attracted strong investment, and the fund now exceeds €20bn.
The company also said that it has developed, with McKinsey & Company, a long-term strategy focused on two dedicated business units – the retail business, and mails & parcels - each with its own plan to close its 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, the company said.
Key growth areas for the company include the parcels market from increased online shopping, premium mail growth especially direct mail, and an increased range of financial products in the retail business.
“The results for 2016 show that the direction of travel for An Post needs to change. 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 e-commerce,” Chief Executive Officer, David McRedmond, said.
McRedmond, who joined the Company in October 2016, went on to say that An Post would price their services appropriately and “deliver the best-in-class service in both our Mails and Post Office businesses for customers throughout Ireland.”
Earlier this month the company announced that it was stepping back from sponsorship of the Cycle Series at the end of 2016.