An Post is still seeking up to 1,500 redundancies, a price rise of 25 per cent and further work practice changes despite announcing a pretax profit for 2004 of €7 million yesterday.

Donal Curtin, the company's chief executive, said An Post was "not out of the woods yet". He said an increase in the price of a stamp from 48 to 60 cent would help the company to complete its rescue plan.

"Despite the success of strict control measures, the An Post cost base remains too high and substantial cuts are essential through headcount reductions, efficiencies, work practice changes and the implementation of the automation agreement," he said.

The company strongly emphasised that, while turnover was up 5.8 per cent to €750 million, major structural issues still had to be tackled. The decision not to pay the terms of Sustaining Progress to its 10,000 staff saved the company about €20 million in 2004. The company also revealed it made €7 million in profits from postal activity during referenda and elections in 2004.

Despite this, the 2004 performance is a marked improvement on 2003. In 2003, it posted an operating loss of €42 million, whereas in 2004 it has managed an operating profit of €1.7 million. Its position was also helped by property disposals during the year of €5.2 million.

Despite this turnaround, Mr Curtin warned that An Post's future prospects "remain uncertain".

Operating costs in 2004 only fell slightly, from €748 million to €745 million.

"Mail volumes declined by 1.3 per cent, the second successive year, despite national economic growth of 5 per cent a year and an additional 80,000 new delivery points," he said.

He said the problems at An Post were compounded by a continuing decline in the number of social welfare transactions taking place across the counter. He said the National Treasury Management Agency was also seeking to cut the fee An Post was paid for selling its savings products by 40 per cent. He said the industrial relations climate in An Post was "resistant to change".

He said a recommendation from the Labour Court about collection and delivery would be crucial for the company. During negotiations on this, An Post management said they were seeking 1,000-1,500 redundancies.

However, Mr Curtin said that, while headcount reductions were important, reducing the number of hours worked by employees at the company was also vital, particularly overtime. The 2004 annual report shows the number of employees fell from 11,918 to 11,440. The number of overtime hours also fell during the year.

On the subject of service levels, Mr Curtin said he was not personally satisfied with the company's next-day-delivery performance, although he questioned the need for two surveys to be conducted in the area: one by An Post and another by ComReg, the regulatory body. Mr Curtin said it was difficult to think too far ahead until the deeper issues at the company were tackled, but he said An Post would be rolling out a new suite of financial products within 18 months.

In relation to 2005, he said the company was trading slightly ahead of budget and turnover was on target. He said cost reduction was slightly ahead of forecasts at this point.