A price increase for postage is inevitable following poor revenue returns in 2000, according to Mr Stephen O'Connor, Chairman of An Post.
Speaking at the publication of An Post’s annual report, Mr O’Connorsaid approval for an increase in international postage rates had already been sought from the Postal Regulator.
The report, published this afternoon,warns that returns from An Post’s core activities are "inadequate" with its Post Offices Division incurring losses for the first time in many years.
While the group turnover increased by IR£27 million (6.4 per cent) to IR£451 million overall operating profits fell IR£2.8 million to IR£7.7 million.
In its annual report for 2000, it emerged that the major contribution to the overall profits came from the sale of its shareholding in the Esat Telecom group to British Telecommunications (BT).
Although all parts of the Group showed some indication of growth, revenues from the Post Offices Division grew only slightly by 2.6 per cent a reflection of pressure from major customers for lower prices.
SDS the group’s parcel distribution and courier business grew its revenues by 9.7 per cent due mainly to strong growth in national traffic
According to the report, the modest operating performance in 2000 reflected the fact that costs are outstripping revenues, that the post offices division has moved into serious losses and that the company has not had a price increase in its biggest business (Letter Post) since 1991.
"The price of posting a standard letter within Ireland is the same today as it was in 1990 while the Consumer Price Index had risen by 29 per cent", Mr O’Connor said.
"The imbalance between the increases in turnover and costs is a matter for concern even allowing for static or declining sales prices in Letter Post and Post Offices.
"Cost increases which outstrip the growth in revenue cannot be sustained and are seriously detrimental to the future of An Post".
The report also shows that during 2000 An Post continued its strategic investment programme with IR£76 million spent on a national automation programme by the end of 2002. It also acquired JMC Van Trans and Wheels Couriers, two companies specialising in same day delivery of documents and parcels.
Group Chief Executive John Hynes said that while pay was the single most important internal issue for the Group. Pay accounted for 70 per cent of total costs and the PPF agreement will provide cumulative increases of 18 per cent and would add IR£64 million to payroll costs.
Referring to losses in the Post Offices division, Mr Hynes welcomed the Flynn Review of the sub post office network. "An Post is committed to the sustainable development of the network", he said.
"However, in the absence of a subvention which was requested by the board in July 2000, annual losses in the post offices division will escalate from IR£13 million in 2001 to IR£28 million in 2004 - losses of this scale are clearly unsustainable," he added.