An Post Reports €1 Billion Sales, Plans Service Cuts Amid Declining Mail Volumes

An Post, Ireland’s postal service, recently reported sales exceeding €1 billion for the first time, alongside a profit of €5.6 million for the year ending March 2024. Despite these encouraging financial results, the organization is considering significant service reductions, including plans to cut mail delivery days. This decision comes amid ongoing discussions about the future of the postal service and its ability to adapt to changing consumer behaviors.

The controversy surrounding An Post intensified last week when the company’s CEO accused a government minister of leaking confidential Cabinet information. As the postal service prepared to appear before an Oireachtas committee, concerns about its financial health became a focal point. While An Post’s sales rose from €922 million in 2023, the organization faces a persistent decline in traditional mail volumes, which fell by 7.6% in 2024.

The implications of these figures are significant. With the rise of digital communication through phones and emails, fewer people are sending letters. An Post’s management cited that mail volumes have been on a downward trend for over a decade. For example, a consistent 7% decline over ten years would lead to a reduction of nearly half the mail volume. Consequently, revenue from traditional mail is diminishing, prompting the organization to reassess its operational strategy.

In contrast, An Post has seen a surge in parcel deliveries, which increased by 12.6% in 2024, largely driven by the growth of online shopping during the COVID-19 pandemic. This shift underscores the need for An Post to realign its focus toward more profitable services. The proposed reduction in mail delivery days aims to cut operational costs while allowing the organization to concentrate on its parcel delivery business, which has shown significant growth.

To illustrate the potential savings, consider the example where it costs An Post €500 to deliver 1,000 letters daily. If the service operates five days a week, the total cost amounts to €2,500. By reducing delivery to four days, the cost could drop to €2,000, while still achieving the same delivery output. An Post’s annual report for 2024 noted that customers are increasingly prioritizing reliability over delivery speed, supporting the shift towards fewer delivery days.

This trend is not unique to Ireland. Postal services globally are adapting to similar challenges posed by declining traditional mail volumes. For instance, New Zealand’s state postal service now delivers mail three times a week in urban areas and five times a week in rural regions. Likewise, Denmark’s PostNord has made adjustments to its delivery schedule, further emphasizing the need for postal services to adapt to current economic realities.

The financial pressures facing postal services can lead to difficult choices. The UK’s Royal Mail, while privately owned, is grappling with similar issues. According to Ofcom, reducing the frequency of ‘second-class’ mail deliveries could save Royal Mail at least £250 million annually, highlighting the urgency of restructuring postal services to maintain financial viability.

An Post’s profit margin remains slim, at less than 1% of its €1 billion sales. This narrow buffer leaves the organization vulnerable to economic fluctuations. The recent report by Grant Thornton indicated that An Post may require additional financial support to avoid widespread post office closures, emphasizing the need for careful financial planning and strategic adjustments.

While the proposed service reductions may not sit well with customers or employees, An Post’s management is focused on ensuring the organization’s long-term sustainability. The challenge remains: how to balance the demands of profitability with the traditional role of the postal service in the community. As An Post navigates these changes, the question of whether it can maintain its commitment to public service while operating as a business will be crucial in shaping its future.