The economic environment for national postal operators was adverse in 2009. An Post, however, adjusted rapidly to these challenging circumstances and remained profitable at the operating level. The Company has shown that it is able to perform well in the most difficult and trying of business environments. In 2009, we experienced a sharp decline in traditional mail volume, partially offset by buoyancy in retail income. An Post has already undertaken significant preparatory work in advance of full liberalisation of the postal market in 2011. This has stood to us in what was a difficult year. The downward trend in mail volume, coupled with imminent market opening, present distinct challenges and opportunities. These will be met by successful product and service innovation across the business, cost reductions, improved quality of service and enhanced efficiencies in all our operations.
We have also benefited from a relatively strong performance by our retail services which offer good potential for further growth in the years to come. The joint shareholders of Postbank recently decided that it should cease trading at the end of 2010. This decision was taken in the context of the current difficult market conditions and following detailed analysis of future potential.
Our fundamental objective is to be the leading high quality, low cost service provider, in order to win and maintain the support of a customer base which will be provided with greater choice by new competitors. This goal is being pursued through a series of successful strategic projects, encompassing every aspect of the Company’s operations and activities.
Customer-focused and competitive
The future for An Post holds major challenges and the outlook remains uncertain as mail volume continues to fall here and elsewhere around the world, albeit at a slower rate than that experienced in 2009. However, I also see great opportunities for the business, for our staff and our customers as we continue to modernise, to transform and become even more customer-focused and efficient.
We must maintain and develop our position in the increasingly competitive packets and parcels business – a significant opportunity for future growth – both in Ireland and overseas.
This approach will underpin our ability to continue to provide the all-important Universal Service Obligation throughout the country, five days a week. We continue to develop a position in a number of ancillary markets. For instance, our subsidiary Air Business, a distributor for publishers and direct mail clients, is now a leading quality provider of mailing services in the fully liberalised and highly competitive UK market.
Pension commitments
The FRS17 accounting deficit in the pension schemes reduced to €403m, compared to €582m in the previous year. However, as is the case with most defined benefit pension funds, the An Post schemes do not meet the Minimum Funding Standards required by the Pensions Board. This is a major challenge for the Company and its employees. A process of engagement is underway with employee representatives. The intention is to develop an agreed plan to address these requirements and to submit this to the Pensions Board by the end of 2010.
Postcode implementation
An Post will have a key role in the planning and implementation of the new Postcode system which will be introduced in late 2011.
The introduction of Postcodes will facilitate the continued improvement in our Quality of Service and will assist us in reaching our target of 94% next-day delivery of domestic mail. This development will also bring diverse benefits to business and customers alike.
Serving businesses and communities
The Company has a dual mandate: a commercial imperative and an obligation to service businesses and communities throughout the State. We have earned our customers’ trust over many years and we will do everything in our power to remain worthy of that trust. Our future success will be based on our core values and this means increasing our focus on our customers, our revenue, our quality, our reliability, our cost control and our management processes and capability, as well as nurturing innovation throughout the Company.
Delivering greater efficiency
We have reported operating profits continuously now for five years. We have come a very long way over those years. Our modernisation is progressing - by delivering greater efficiency and better quality. While our targets are stretching, we are very confident that, with the continuing support of our staff, we can and will achieve our strategic goals.
On behalf of the Board, I would like to thank the management, staff and our contractors for their loyalty, commitment and work during 2009. I would also like to thank my colleagues on the Board for their ongoing commitment. It is extremely satisfying to see that their continued hard work, over a number of years, has brought significant improvements, which now position the Company well for the difficult years ahead. Everyone throughout the organisation has played an important role in improving the Group’s performance and the contribution of the directors in helping to set the course, has been particularly valuable.
I want to thank Patrick Davoren, who retired from the Board in February 2010 after over 17 years service on the Board. His contribution is greatly appreciated.
In particular, I would like to say a special word of thanks to the Minister for Communications, Energy and Natural Resources, Mr. Eamon Ryan, T.D., and his officials for their assistance and support throughout the year.
Immediate prospects
Overall, 2009 is a year of which everyone in An Post can be proud. However, this does not mean that we can be complacent. January 2011 will see the introduction of a fully competitive postal market in Ireland. Our ability to rise to challenges in the past and the improvements we have delivered in recent years bode well for An Post in the coming years. I have great confidence in the Board, management team and staff as they deal with the issues facing us and I am confident that this Company will prosper into the future.
John Fitzgerald
Chairman
25 March, 2010