An Post expected to discuss closure of SDS

The potential closure of An Post's loss-making parcel and courier service SDS is expected to be among a range of issues discussed by the board of the company today.

The closure option is just one of several proposals expected to be considered.

Another option being considered is reintegrating the service into the main An Post group.

Both plans might allow An Post to dispose of the 80,000 sq ft SDS site on the Naas Road, which has been valued at more than €20 million.

The company has been engaged in major property disposals in the last two years as its finances have deteriorated.

An Post has refused to comment on which option has the support of senior management.

Unions will insist any SDS staff who wish it are redeployed to the An Post group or are offered a generous voluntary redundancy package.

A few months ago there was also speculation SDS could be sold, possibly to DHL.

While several An Post directors are anxious to exit the business, under its universal service obligation An Post must deliver a certain number of parcels annually.

Consequently, the company will not be able to fully remove itself from the parcels business.

SDS is believed to employ more than 400 staff.

In the Republic, its turnover dropped in 2003 to €71 million from almost €80 million the year before.

There is intense competition from the private sector in the parcel business.

In its 2003 annual report and accounts, the company admitted SDS had experienced a difficult year.

"A delay in implementing much-needed restructuring contributed to continuing losses. Revenues were well below budget, partly due to a squeeze on margins as a result of increased competition from firms unencumbered by our high level of fixed costs. Our decision to exit unprofitable business was a further contributing factor to the decline in revenues," wrote chairwoman Ms Margaret McGinley.

These views are understood to have some support from Mr Curtin and other directors.

This group believes An Post should exit the parts of the parcel business that incur the biggest losses.

Several directors believe there is little point in An Post continuing to operate in areas where the private sector has established dominance.