Romania’s Govt To Restructure State-Owned Postal Co Facing Financial Collapse

The Government-approved restructuring and modernization strategy, obtained by MEDIAFAX, stipulates the implementation of an integrated IT system. Also, cash transport and processing operations will no longer be outsourced, 400 vehicles for shipping valuables will be purchased and five profit centers will be developed. The company will also attempt to attract clients from the fields of services, utilities, communications and banking.

According to the document, the company went from a gross profit of 34,3 million lei (EUR1=RON4.2372) in 2007 and RON4.5 million in 2008, to RON150.4 losses last year. Estimated results for this year forecast losses of RON250 million.

The current situation was allegedly caused by purchase contracts worth over EUR300 million, which the company could not afford, increased wage expenses, postponing the modernization of regional transit centers, the lack of an integrated IT system and the inefficient administration of major accounts. Also, the company's management employed a host of impractical solutions, among which the purchaser of new fleet vehicles.

The restructuring program will introduce and develop a door-to-door sales service in urban areas, digital communication services, online commerce operations, and a call-center for processing orders. Automated processing systems will be introduced in four major cities, including capital Bucharest, and the post code system will be perfected and advertised. The post company will also offer financial services, such as deposits, loans, bank cards, insurance policies and currency exchange. The total value of the main investments stipulated in the strategy is EUR113 million.

The Government estimates that by enforcing these measures the company's losses will decrease to RON60.4 million next year. The Romanian Post Office is expected to be out of the red in 2012, and estimates say it will post a gross profit of RON50.6 million in 2014. According to forecasts, the financial portfolio will bring a 25% contribution to the company's overall revenue, while the market share for post services will be maintained at a minimum of 75%. Financial improvement will also be sustained by the gradual increase on postage tariffs throughout 2011 and 2012.

The Romanian Post will remain the country's only authorized provider of postal services until December 31, 2012.

The company's main shareholders are the Communication Ministry and investment fund Fondul Proprietatea.

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