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08.06.2022
In the challenging year of 2021, which continued to be marked by a rapid spread of the COVID-19 pandemic and the new system for the customs clearance of third-country items in all European Union member states, the net turnover of Latvijas Pasts exceeded 100 million euro for the first time in its history. The turnover growth was driven to a large extent by the segment of postal transit items, while the demand for traditional postal services dropped due to the restrictions imposed during the pandemic, the increased use of digital solutions on a daily basis by consumers and the decrease in inbound postal items due to the need to pay VAT on third-country items from the first cent as of the 1st of July 2021.
The net turnover of Latvijas Pasts in 2021 amounted to 105.3 million euro, and this is the historically highest turnover of the company, exceeding the 100-million-euro mark for the first time, according to the report of Latvijas Pasts for 2021. The net turnover of Latvijas Pasts in 2021 exceeds the amount of turnover in 2020 by 11.2 million euro or 11.9%. At the same time, due to a number of external conditions, the company’s net profit is negative and amounts to 1.2 million euro.
For the second consecutive year, the operations of Latvijas Pasts in 2021 were marked by a significant impact of measures taken to contain the spread of the COVID-19 virus on the company’s performance, significantly increasing the volume of e-commerce items and the demand for more convenient item delivery solutions on the one hand and restricting the possibilities for the provision of onsite postal services at post offices due to national security requirements on the other hand, and thus adversely affecting the amount of services provided at post offices.
“The year 2021 is a historic and reputable period for Latvijas Pasts, because despite the tense external conditions, we managed to achieve a record turnover. Thanks to the loyalty of our customers and the enthusiasm and ingenuity of Latvijas Pasts employees during COVID-19, investments in technology and risk diversification measures, we have exceeded the 100-million-euro turnover mark for the first time in our existence,” Mārcis Vilcāns, Chairman of the Board of Latvijas Pasts, points out.
The most significant increase in the revenue of Latvijas Pasts in the reporting period is due to postal item transit services. In 2021, the amount of transit items processed at Latvijas Pasts continued to grow, with the company accepting twice as many charter transit aircraft as in 2020 and nine times as many as in 2019. The growth of transit services resulted in an increase in the company’s revenue by 58.1% in the 12 months of 2021.
Revenue growth was also demonstrated in the domestic item segment of express mail services, which was facilitated by the desire of customers to receive their items as quickly as possible by courier during the state of emergency. The e-sending tool was increasingly used to prepare items for sending, which was especially convenient for shipping items during COVID-19, as it allows customers to prepare and send items without leaving their home or office and without visiting a post office. The total number of express mail items in the 12 months of 2021 compared to the 12 months of 2020 increased by 17.5%.
Following changes in the European Union regulations, from the 1st of July 2021 absolutely all goods purchased outside the EU were to become subject to value added tax and item customs clearance procedures. As in other European Union member states, with the entry into force of the new regulations, Latvijas Pasts observed a substantial decrease in the number of items from third countries.
The new EU customs clearance system had an impact on the overall universal postal service (UPS) revenue, leading to a decrease of 6.7% compared to the plan. A significant drop in the number of items in the UPS segment has been observed for inbound items from third countries after the 1st of July 2021, when the EU introduced the new customs clearance procedure, as well as for letter-post items sent from Latvia to foreign countries and for Latvia’s domestic letter-post items, where the drop continues every year along with the development of new technologies, mainly due to the fact that business customers switch to the use of electronic mail environment in communication with their customers and also due to the decline in the traditional letter segment. The total number of domestic letter-post items in the 12 months of 2021 compared to the 12 months of 2020 decreased by 17.11%.
In the first 12 months of 2021, the cost of transporting cross-border postal items increased significantly, firstly due to the amount of items and secondly due to the overall global transport costs affected by the consequences of the worldwide COVID-19 crisis for air fares, which is the main mode of transporting postal items and which showed a disproportionately high increase in some directions.
During the reporting period, Latvijas Pasts implemented a number of modernisation and development projects, the most significant and the largest of which were the digital customs clearance application atmuito.pasts.lv and the opening of the first automated parcel locker or parcel tower in Latvia.
In preparation for the large-scale changes in the EU, introducing customs clearance of third-country items from the first cent as of the 1st of July 2021, Latvijas Pasts invested around 300,000 euro to expand the information technology infrastructure and process administration capacity and to introduce new digital customer service and data exchange systems, including the app atmuito.pasts.lv. The notification sent to customers includes a unique and individual link to the app atmuito.pasts.lv for each recipient, both in the mobile text message and in the printed notification, which has a QR code on it: by scanning it, the recipient of the item is redirected to the app atmuito.pasts.lv.
By developing various item delivery solutions based on the modern consumption habits of customers, during the reporting period, Latvijas Pasts supplemented its parcel locker network with the first parcel tower in Latvia: an efficient and modern parcel delivery machine in Pļavnieki, which is one of the busiest neighbourhoods in Riga. Latvijas Pasts parcel tower with the automated item delivery function is the most efficient item servicing solution currently operating in Latvia. The five-metre-high tower has space to store a substantially larger number of items simultaneously – up to 500 items at a time – which means that customers can receive their items faster. In addition, it is more environmentally friendly, as it occupies a very small area (5.4 sq m), but offers a considerably higher capacity.
After the end of the reporting period, the biggest impact on the operations of Latvijas Pasts continued to be COVID-19-related factors, which at the beginning of 2022 significantly affected employee health and ability to work; the third-country item customs clearance and tax payment system in the EU; as well as Russian military aggression in Ukraine and the consequent need to re-arrange and re-organise the item exchange and transit item flow. The volume of items was also affected by fluctuations in customer sentiment related to purchasing power, afflicted by the rising energy and fuel costs and, consequently, all other consumer prices.
Under the influence of the current trends in the postal industry of the world and the global technological revolution, Latvijas Pasts has been undergoing a substantial change in recent years: the demand for traditional postal services is declining, but at the same time the segment of modern postal services is growing significantly. As internet commerce expands, more and more goods are being purchased virtually, and they need to be delivered to customers in ever shorter deadlines and in an increasingly diverse, customer-friendly way. Therefore, Latvijas Pasts continues its targeted efforts, implementing modernisation projects and actively moving towards the improvement of services and customer care in 2022.
About SJSC Latvijas Pasts
Latvijas Pasts ensures the widest availability of postal services throughout Latvia by maintaining more than 600 post offices. The primary function of the company is provision of the universal postal service; Latvijas Pasts also provides commercial transport, express mail, payment, press subscription, retail and philatelic services. Latvijas Pasts is a wholly State-owned company with about 3,000 employees. The quality measurements of Latvijas Pasts domestic mail deliveries are regularly conducted by Kantar TNS, one of the leading market, social and media research agencies in Latvia. In turn, the quality measurements of the cross-border deliveries are provided within the framework of the International Post Corporation through the intermediary of the research companies Kantar TNS, Ipsos and Quotas.
Additional information:
Gundega Vārpa | Head of External Communications
E-mail: pr@pasts.lv; gundega.varpa@pasts.lv
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