Business

An Post revenues rise as ‘frothy’ ecommerce offsets fall of traditional letters

Ecommerce is currently growing at about 16% while post volumes are falling at a rate of about 9%

An Post group chief executive David McRedmond said the company could still reach €1 billion sales target by 2026. File photograph.

Joe Brennan
Thu Jun 27 2024 - 14:34

An Post revenues rose by 4 per cent last year to €922.9 million as an ongoing surge in ecommerce parcel deliveries offset declining letter volumes.

E-commerce parcel deliveries grew by 14 per cent, while traditional letter volumes declined by 6.1 per cent, the State-owned postal service company said in its latest annual report, published on Thursday.

An Post, which has more than 900 post offices around the State, said it plans to grow sales to the €1 billion mark by 2028, setting an official target that is two years later than when it had previously said it would hit that level.

However, group chief executive David McRedmond said the company “might still get there by 2026″, but it largely hangs on the pace of diverging trends between ecommerce activity and traditional letters.

READ MORE

“The ecommerce market is quite frothy at the moment. We saw 14 per cent growth last year and its currently running at about 16 per cent,” he said. “Mail volumes are falling at a rate of about 6 per cent a year, though so far this year it’s down 9 per cent.”

The company’s net loss narrowed sharply to €20.8 million last year from a €224.1 million shortfall in 2022, which had been driven by a one-off accounting charge relating to An Post’s pension scheme.

The loss for 2023 included a €16.7 million capital loss on the €17.4 million sale of its minority stake in the National Lottery last year as the lottery operator was taken over by French group operator La Française des Jeux (FDJ).

“Originally the investment was €25 million and over the course of the life of the investment the company received €46 million in cash dividends,” it said. “The accounting loss of €16.7m in these financial statements reflects a deficit against a carrying value at the time of the disposal.”

An Post’s financial services arm is generating more than €100 million of annual revenues from providing everyday agency banking transactions on behalf of AIB and Bank of Ireland customers to offering insurance products as an intermediary for various underwriters.

The company has been looking to enter the Irish mortgage market since 2018, though a plan to enter a partnership with home loans start-up Moco ended in 2022. Moco was taken over by Austrian bank Bawag in early 2023 and began offering home loans at the end of the year.

Mr McRedmond said An Post is in talks with a potential partner with the hope of entering the mortgages space “within 12 months”. He declined to identify the other party or even say whether they have an existing presence in the Republic.

Earnings before interest, tax, depreciation and amortisation (ebitda) doubled last year at An Post to €38.5 million.

The company said in June last year that it aimed to cut its then 10,100-strong workforce by 1,000 over three years, driven by the outcome of a redesign of postal delivery routes. By the end of 2023 it reduced jobs by a net 100, given that it had also been recruiting technology workers during the period.

“We’d now expect that there will be 1,300 fewer employees over the period,” he said, adding, however, that final numbers will largely depend on the ongoing pace of growth of ecommerce parcels activity.

An Post said it had repaid a €30 million so-called transformation loan it had received from the government in 2017. This was financed by positive cash flow generated by the business and reduced overall debt to €39 million from €82 million.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

LATEST STORIES