“The hole will turn into a hole”
President of the Federation Council Valentina Matvienko claims that there is a growing financial deficit in Russian Post and the current situation needs to be analyzed. talking about this stated at the meetingAddressing Maxim Reshetnikov, head of the Ministry of Economic Development.
“The financial situation there is very sad and everyone knows it but no one takes action. Maybe we should do a comprehensive analysis of what’s going on: Maybe there are other processes that need to be fixed, perhaps with the involvement of law enforcement or others. Well, this is impossible: the financial gap in the post office is getting bigger and bigger, and no one is reacting,” said Matvienko.
According to him, it is necessary to create “an accurate financial model for the existence” of the business. Matvienko noted that “Shelving” is unacceptable in this case, otherwise “the financial hole will turn into a huge pit into which everything will fall.”
In response, Reshetnikov said that the problem of Russian Post’s financial situation “causes great concern.” According to him, the Cabinet of Ministers is considering the possibility of making an infrastructure payment for marketplaces in favor of Russian Post. He emphasized that such a step was necessary to provide this organization with a stable source of income and balance its economy. Reshetnikov noted that the government now has two options:
either the budget will assume obligations for the maintenance of the Russian Post, or the marketplaces will support it.
“Really <…> We will go to infrastructure payment. Another point is that you need calculations for this payment, for this you need to understand what the Post Office guarantees. <…> and for this we need a plan for the financial recovery of Russian Post,” said Reshetnikov.
The situation in this state company was first brought to the attention of Gennady Ordenov, a member of the Federation Council Committee on Agricultural and Food Policy and Environmental Management. The senator said that “the issue of supporting the Russian Post now needs a solution.” He also said that the options of making payments for the infrastructure of the marketplaces in favor of this organization (up to 28 billion rubles per year) or establishing uniform rules for the delivery of goods to the marketplaces are also “being considered”.
“The post office delivers on the basis of a license and compliance with all relevant requirements, while marketplaces and online stores create alternative networks and open delivery points, mostly in profitable locations,” the senator explained. Ordenov asked Reshetnikov which option could be the solution.
“Tense situation”
In the first six months, Russian Post managed to improve its financial situation, although “the situation remained tense.” In this respect speech General Director of the enterprise Mikhail Volkov told socialbites.ca.
“We did it in six months <…> “Reduce operating losses by almost three times, open many temporarily closed branches,” Volkov said.
According to him, there are around 27 thousand branches in rural and remote areas. “People need them <…> “But maintaining them requires systematic support,” he added.
According to Volkov, most items have negative margins and have a purely social mission.
Mail indicators
Over the past 10 years, Russian Post has replaced 5 managers, and the company itself has undergone a number of significant changes, which has led to a decrease in the delivery time of mail items, as well as an improvement in the quality of customer service.
In 2020, Russian Post’s revenue according to IFRS amounted to 210.7 billion rubles, net profit – 3.4 billion rubles. 108 million packages were delivered from Russian online stores and most of the largest marketplaces were connected.
The organization’s revenue for 2021 amounted to 228.1 billion rubles, and net profit amounted to 1.5 billion rubles. Digital revenue increased by 42% compared to 2020, reaching RUB 52.8 billion.
The company suffered a loss in 2022 for the first time in 9 years. Their amount amounted to 27 billion rubles. Russian Post’s revenue decreased by 4% to 208.4 billion rubles. At the same time, operating expenses increased by 16 billion rubles.
The organization includes such indicators in logistics costs, equipment maintenance costs, etc. associated with the increase. “Due to the suspension of global brands in Russia, difficulties with payments and transportation restrictions, the flow of international mail, both incoming and outgoing, has decreased significantly,” the company said.
In January 2023, Russian Post was headed by Mikhail Volkov, who previously headed the National Lottery. With the new CEO, one of the primary tasks of the “anti-crisis team” was to increase performance and revenue.