Romanian Post pushes the envelope

On October 17, the Romanian Post launched the MoneyPost currency transfer service, its latest step in developing new business lines. President and GM Dumitru Daniel Neagoe shares with BR his insight into the future outlook.

Otilia Haraga

How is the Romanian Post’s restructuring process going?
The restructuring process involves the reorganization of the postal network as well as the strategic restructuring of the Post’s activity. The restructuring of the postal network is nearing an end, cutting down the number of post offices, and thus respecting the commitments taken before the IMF, and cutting down on the management positions by modifying the organisational chart. The strategic restructuring on the other hand is in full swing, being a continuous process that aims to reposition the company on the competitive market where it has its activities.

What is the Romanian Post’s strategy to maximize revenues and cut losses?
The Romanian Post will continue the strategic projects initiated ever since 2010 to increase revenues: selling general insurance policies at its desks, selling lottery tickets, developing electronic commerce, the informatization of the POS (point-of-sale) network, which leads to more rapid transactions and lower costs, and the re-launch of the fast courier service. This will be re-launched with a new price policy, plus new added-value services for corporate clients and individuals, which will lead to growth of 30 percent in the number of clients and revenues.

The estimated gross profit is EUR 540,740 (over RON 2.3 million). After the deduction of profit tax it will be minus EUR 187,180 (minus RON 810,000). Worth mentioning, however, is this: the expenditure on services delivered by third parties in Q1, 2011, was reduced by 12 percent, not only compared to the same period of 2010, but also compared to the budget of revenues and expenses approved by the government for the current year. Moreover, this also involved the cancelling, postponement or renegotiation of certain contracts, for example with G4S, UTI-Romprest or Blue Air. Aditionally, financial expenses for the first half of the year are 27 percent lower than the budget for 2011, and total expenses are RON 20 million lower than stipulated. In fact, the Romanian Post has already announced the improvement of its economic-financial situation and is back in profit as of August. The profit generated in August 2011 was approximately EUR 138,651 (RON 600,000), and the financial results show the trend will be positive in the coming months.

Are there ongoing discussions to attract an investor for the Romanian Post?
As has been announced, postal operators from Belgium, Austria and Germany have already sought information and public data from the Romanian Post. They are the first to have made this step, but any national postal operator could ask for such information.

What of the institution’s plans to found the Romanian Post Insurance Firm and the Romanian Post Bank?
The management is formulating plans for the founding of the two units. At the moment, the projects are in the analysis stage, which is being carried out by an internal commission especially set up for this purpose. At the end of the analysis, there will be an assessment of the outlook, risks and benefits, the necessary resources, the length of the process as well as the legal stipulations that need to be observed. These are large-scale projects meant to optimize the logistic structure of the labor force and attract capital, given the fact the two economic entities will be active in the financial sector.

How many branches does the Romanian Post have and what is the target number?
At the end of September 2011, the postal network numbered 5,846 post offices, 4,854 in rural areas and 992 in towns and cities, as a result of the decision to merge some. The final target, according to the letter of intent agreed between the IMF and the Romanian government, is to cut the number of units from 7,100 at the end of 2010 (in January 2011 there were 7,033) to approximately 5,800 by December 2011.

How many employees does the Romanian Post have? How many have been made redundant or relocated to other units?
The Romanian Post registered an average number of 33,377 employees in September. During the first stage of the network reorganization, 70 employees were made redundant. The target of the company’s management is to make the internal structure and postal network flexible and efficient, not to make employees redundant.

otilia.haraga@business-review.ro