Losses balloon at An Post as chief executive flags new ‘direction’

Transaction volumes fell across organisation in 2016, while pension deficit rose to €283m

An Post’s 2016 annual report records dropping revenues, a pension deficit spike, and an increase in pretax losses. Photograph: Bryan O’Brien

An Post’s 2016 annual report records dropping revenues, a pension deficit spike, and an increase in pretax losses. Photograph: Bryan O’Brien

 

An Post’s pretax loss ballooned to €15.6 million last year as costs climbed and revenues declined, while its pension deficit swelled by over €100 million.

The company, which had a pretax loss of just over €1 million in 2015, expected to lose €50 million this year before a postage stamp price increase was agreed. The new stamp pricing arranemgent means that loss is not expected to be nearly as significant as the €50 million figure, a spokeswoman said.

According to a statement, revenues dipped slightly on the previous year to €825.7 million, but costs grew by 2.2 per cent to €18.4 million. The cost increase is attributed to “one-off costs and the impact of the labour court pay increase of 2.5 per cent”.

The volume in An Post transactions fell across a variety of the organisation’s key offerings. Welfare payments dropped due to a reduction in unemployment, letter volumes fell in line with global trends, and bill payment transactions declined as a result of people paying bills online.

The increasing losses, principally stemming from the 5.2 per cent drop in letter volumes, “have consumed An Post’s cash reserves”. The net cash balance of €26 million was “insufficient for the company’s medium-term sustainability”, and has dropped from €150 million in 2011.

An Post increased the price of stamps from April this year and says that in the six weeks since the increase, “there has been no indication of any additional acceleration in mail volume decline”.

The company believes that the projected yield from the price increase will provide stability for the next 12 to 18 months as the company implements a new strategy.

Direction of travel

“The results for 2016 show that the direction of travel for An Post needs to change . . . I am confident that we have stabilised the immediate-term finances through the recent price adjustment, and done detailed work to design sustainable strategies for both the mails and Post office business,” said David McRedmond, chief executive of An Post.

A strategy developed with McKinsey, the consultancy, could “close the projected deficits by 2021”, the statement says.

Commenting on the company’s future, Dermot Divilly, chairman of An Post, said: “There’s no doubt that challenging and testing times lie ahead for An Post but by harnessing the power of its expertise and brand I remain confident of its future.”

At the company’s agm, which took place on Thursday, An Post’s accounts showed that the organisation had a pension deficit of €283.4 million at the end of 2016, up by over €100 million on the previous year.

Also at the agm, the company confirmed the appointment of Deloitte as auditors for 2017, replacing KPMG who have been the company’s auditors since 1984.