The general business environment continued to be challenging both nationally and globally. In addition to the recessionary issues affecting every Irish business, falling mail volumes, increasing electronic substitution and strong competition are now well established realities impacting across our mails, retail and subsidiary businesses.

Despite the challenges of the economic climate, the Company continued to invest in those areas which are critical to the business and also in areas which have the potential to generate new revenue streams. In tandem, we maintained our strategic focus, improving service quality, competitiveness and innovation in every part of the Company. In doing so, An Post is determined to support its customers in developing and growing their businesses and also to play its part in the recovery of the Irish economy.

For the fourth successive year we delivered record domestic Quality of Service results and continued to drive service improvements for international mail.

Group turnover of €805m, just exceeded that of 2009 (€804m). This was a good result when viewed in the context of the adverse economic situation.

The Company is continuing its process of engagement with employee representatives with a view to finalising a plan to address the pension fund deficit and meeting the minimum funding standards set by the Pensions Board.

Operating Profit

An Post achieved a group operating profit of €5.8m in 2010, compared to €5.7m in the prior year. This performance resulted from the ongoing implementation of change programmes. A reduction in Full-Time Equivalents (FTE) of 331 within the An Post Company, resulting in labour costs savings of €20m, and various efficiencies gained through new working arrangements and automation combined to contain costs.  

Mails Business

Traditional mail volumes declined by approximately 7% during 2010. This was due mainly to the impact of the economic recession on Irish businesses, as well as ongoing electronic substitution and increasing competition in the mails business. A full 1% of this decline in mail volume was directly related to the weather disruption at the end of the year. 

As part of our strategy to grow the parcels business and to increase our share of the market, the Company invested in the further development of its online shopping directory iloveshopping.ie. Assisted by a national advertising campaign and with added choice and special offers online, iloveshopping.ie has attracted a total of 337,448 visitors since its launch.  In all, traffic to our participating retailers’ websites has reached almost 400,000 visits. As well as global brands and the large high street chains, the site also includes a large number of Irish SMEs, many of whom are home-based, rurally located businesses. 

Development of Direct Mail products, including the introduction of online campaign management tools continued, with a particular emphasis on supporting the SME sector. Expert briefings and business seminars in multiple locations across the country were very positively received by attendees as practical aids to business development and cross-sector networking. 

An Post’s headline tariff of 55c has remained at this level over the last four years. Compared with our European counterparts and adjusting for purchasing power parity, this was the seventh lowest headline tariff out of 29 operators (EU-27, Norway and Switzerland), according to Deutsche Post DHL’s Letter Prices in Europe Report (issued in March 2010). 

Royal Mail recently issued a comparison of rates at the 100g level which showed that An Post’s rate was the lowest at this weight step (for EU-15 as at December 2010). Many other operators are reviewing their tariffs in response to developments in the postal industry. 

An Post has successfully addressed many of the issues which are central to competitiveness by improving quality and reducing costs.

It is, however, critical that prices reflect the market place and allow the Company to compete while addressing issues such as volume decline. Reliability of performance and sustained improvement are vital to the ongoing success of our mails collection, processing and delivery business, particularly in a market now open to full competition. Solid progress was made in 2010 towards our target of 94% for next day delivery of domestic mail, the fourth successive year of record quality results. Inclement weather at the beginning of the year and again in the weeks leading up to Christmas seriously disrupted business across the country, impacting our mail collection and delivery operations.

For the sixth successive year An Post has met and exceeded the international mail quality delivery targets as set in the European Union (EU) Postal Directives of 85% in three days and measured by the International Post Corporation (IPC) UNEX Measurement System. The Company achieved 95.5% on inbound international mail and 93% on outbound international mail.

We were also awarded the International Gold medal for the performance of our International Courier Mail service and we achieved recertification for our hard-earned IPC Certificate of Excellence in the Management and Processing of International Letter Mail, first awarded in 2009. 

An Post will participate in the process to implement a national postcode system. The exact details and nature of the system will emerge as the current tender process proceeds. 

Postal Market Liberalisation

While the year was marked by final preparations for the full liberalisation of the Postal Market in 2011, the reality is that more than 60% of the Company’s business has been open to full competition for several years. In fact, the percentage is even greater when electronic alternatives are taken into consideration. 

Several strategic projects reached their conclusion in 2010, timed to maximise our readiness for increased competition in the new, fully open market.

The funding of the Universal Service Obligation (USO) continues to be a central issue for the postal sector across Europe. As the designated provider of the USO, An Post is committed to providing a top quality service to all its customers. However, faced with the commercial realities of shrinking mail volumes, increasing competition and electronic substitution, this challenging business issue will be a key priority for An Post during 2011 and 2012. 

Retail Services

An Post’s retail business performed very strongly once again, with record inflows of funds to State Savings products and Prize Bonds. A further €3.1bn was invested in State Savings products during 2010. There was a steady increase in BillPay transactions and the addition of new financial services such as cash lodgement facilities for customers of National Irish Bank. Post office revenues increased by 4.6% during 2010 when compared to the prior year. An Post’s unique network penetration, customer relationships and a rapidly growing suite of products combine to provide the platform on which the Company will continue to develop its diverse product and service portfolio. Investment in facilities improvement and staff training are continuing with a new focus on innovation and retail excellence so as to better service the requirements of our 1.7m weekly customer base. 

The computerisation of all small rural post offices was completed, enabling customers to avail of our complete suite of postal, communications and financial services products. 

The difficult but necessary decision to achieve an orderly wind-down of Postbank was taken by An Post and BNP Paribas in February 2010 and fully executed by December. One Direct and PostPoint were bought back by An Post as part of the joint venture wind-down agreement. 

Postfone, An Post’s mobile phone offering, has achieved steady and sustained growth since its mid-year launch, performing very strongly in the run-up to Christmas. A new commission-free facility for buying Sterling and Dollars was introduced in selected post offices in the latter part of the year and is currently being extended across the Retail Network.

A new-style post office outlet – the first of its kind in Ireland – opened in Swords, County Dublin in October. This new retail unit is a key centre for new product innovation and testing. The open – plan layout features dedicated product zones and highly secure customer cash payment systems. The customer response has been very positive and there has been a marked increase in business when compared to the previous location in Swords. It is planned to open a second retail office of this kind in 2011.

With the range of postal, communications and financial services offerings available at post offices steadily increasing, retail staff and contractors are being supported by way of ongoing product, retail sales and customer service training. An investment was made in improving post office premises and in-branch customer information systems by way of display screens, on-line terminals and general outlet improvement.

Change Programmes

The implementation of change programmes across all areas of the business continued to make significant progress, in close cooperation with the trade unions representing An Post staff. Once again these programmes were a significant contributor to overall cost reduction. Improved flexibility, efficiency and cost effectiveness continue to be key elements in our drive to provide superior customer service. Success in these areas will ensure financial stability and will enable us to compete for, and win, business in an increasingly competitive market.

Given that labour costs account for 70% of our cost base, it is imperative that we achieve the necessary savings. A staff Full Time Equivalent (FTE) reduction of 331 was achieved in 2010, following a reduction of 402 the previous year. As part of the strategy to deal with mail revenue decline we plan to reduce staff FTE numbers by 1,975 between 2010 and 2015. 

During 2010, Capital expenditure of €47m, all funded from An Post’s own resources, was invested in facilities and equipment.

Capital Expenditure

Installation of the new automated processing lines at the Dublin and Portlaoise Mail Centres is now underway. This initiative will increase processing capacity for small parcels and packets – both important growth areas for the Company. The investment will also enable further quality of service improvement and provide significant cost efficiencies across our processing and delivery operations.

An Post Brand

Strategic investment in the An Post brand, to reinforce the Company’s unique position, continued in 2010.

We commissioned a number of new corporate advertisements as well as business and community – based sponsorships, most particularly in the areas of Adult Literacy, Cycling and Youth Soccer. Many of these initiatives, including the An Post Cycle Series and recently announced An Post Rás 2011, are aligned with local business enterprises, bringing with them significant tourism and service provision opportunities to towns and villages across the country.

An Post drivers, throughout the network, received advanced driving skills training which, in conjunction with the continuation of the fleet replacement programme, improved cost efficiency and will reduce our carbon output and produce further efficiencies. A modern new uniform was developed, tested and introduced for all mails collection and delivery staff. 

Subsidiary Companies

While the mails division is by far the largest part of An Post’s business, the Group’s subsidiary companies increased their positive impact on profit during 2010. Revenues generated by these companies increased from €46m to €67m.

Heightened Staff Engagement and Customer Focus

We have been investing considerable time and resources in staff engagement during the last four years and the impact of this is beginning to become evident across our operations. Almost all employees have participated in workshops designed to build a shared understanding of, and commitment to our mission, vision, values and behaviours. Staff have  embraced this approach with pride and enthusiasm. Improved involvement and new channels of communication now exist and our staff and their  representatives are fully conversant with the reality of customer expectations, business challenges and the commercial opportunities facing the Company. 

Attendance levels have steadily improved across all areas of the Company over the last three years and have stabilised at industry norms. The ongoing commitment to training and development was evident in 2010 with record numbers of staff involved in customised management development  programmes.  

Planning for our Future

In 2010, we achieved improvement across all the key aspects of our business – quality of service, cost containment and the broadening of the revenue base. We must continue to transform the Company while focussing on our goal of being a high quality, low cost service provider. We must maintain and enhance our customer focus and ensure the development of innovative products and services. We must align the Company, its structures and resources with the changing business reality that we face. We look to the future in a liberalised mails market with confidence and a strong belief in our ability to deliver on every level. As a critical channel for every aspect of Irish life and business, a major employer across the State and a significant buyer of goods and services, An Post can be relied upon to play a full and active part in the national recovery programme.  


Donal Connell
Chief Executive