Latvijas Pasts net turnover in 2022 amounts to EUR 100 million and its profit is EUR 2.2 million
18.05.2023
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The operations of Latvijas Pasts and the postal industry as a whole in 2022 were significantly affected by a set of several external circumstances: post-pandemic conditions in the field of logistics, Russia’s invasion of Ukraine and the resulting changes in the volume of postal items in several directions, global inflation and especially the rise in energy resource prices, which had an impact on both costs and consumption habits. Under these conditions, Latvijas Pasts was able to generate additional revenues in segments not related to traditional postal services in 2022 and ensure a net turnover of EUR 100 million and a net profit of EUR 2.2 million, according to the audited report of Latvijas Pasts for 2022. These indicators were mainly impacted by the increase in other income and transit revenues.
Due to Russia’s invasion of Ukraine on the 24th of February 2022 and the imposed sanctions, a sharp drop in the amount of postal items can be observed in several groups of services during the reporting period, especially affecting cross-border item flows with the countries involved in hostilities. The procedure for customs clearance and tax payments for items from third countries from the first cent adopted in the European Union from the 1st of July 2021 is still making an impact. The demand for traditional postal services is decreasing year by year, as the share of digital items is increasing with the resulting decrease in the volume of the universal postal service. At the same time, during the reporting period, Latvijas Pasts remained active in modernising the company, improving the environment for the provision of postal services and ensuring the improvement of the company’s financial situation, which made it possible to achieve a turnover of EUR 100 million and make a profit.
“I would like to thank all Latvijas Pasts employees and customers for their cooperation and patience in 2022. After the tense period of the pandemic, we faced Russia’s invasion of Ukraine, which yet again created new and unprecedented challenges for our company. However, thanks to our loyal employees and customers, we generate solutions for productive work even in these conditions. Latvijas Pasts continues to work actively to ensure sustainable development and environmentally friendly operations, providing modern and high-quality services to all residents of Latvia,” Mārcis Vilcāns, Chairman of the Board of Latvijas Pasts, points out.
As a result of promptly implemented measures, Latvijas Pasts actively diversified its offer in the relevant market segments in 2022, being able to ensure stable financial indicators, for example, increasing revenues in cargo transportation and postal transit services. Positive results are based on active efforts taken to gain new customers, expand the range of services, develop areas of cooperation and ensure maximum utilisation of transportation and item processing resources.
The most substantial increase in Latvijas Pasts revenues during the reporting period was made up of transit services and cargo transportation, while the largest decrease in revenues was in the universal postal service (UPS). A decrease in revenues can be seen in almost all subgroups of the UPS, and this downward trend is observed every year, as with the increased use of digital services, the demand for traditional postal services decreases. The most significant drop in the UPS revenues can be observed in connection with the delivery of letter-post items, both in the segment of domestic items and also in regard to items transported by Latvijas Pasts outside Latvia and delivered to addressees in Latvia from foreign countries. This can be explained by the influence of external factors: both the development of technology and increasing digitisation, which reduces the number of items of legal entities, and the decrease in the purchasing power of individuals.
When planning the 2022 budget, it was assumed that the incoming item flow, which was negatively affected by the customs clearance and tax collection procedure applicable throughout the European Union for all items from third countries from the 1st of July 2021, would begin to recover, however, the incoming volumes in 2022 continued to be lower than planned. Likewise, in 2022, after Russia’s invasion of Ukraine, a drop in the number of items can be observed in the entire Eastern European region.
Under the influence of inflation in 2022, a noticeable increase in expenses, which affected the profit indicators of Latvijas Pasts, was observed regarding the costs of transport, energy resources, premises maintenance, rent and utilities. For example, the increase in transport costs in 2022 reached EUR 1 million, but compared to 2021, these costs increased by EUR 1.4 million.
During the reporting period, Latvijas Pasts, focusing on sustainable development in the interests of the state and society, steadily continued the implementation of modernisation projects to expand the range of services, improve the convenience of customers and employees and diversify the options for receiving items. In 2022, Latvijas Pasts investments reached EUR 3.1 million.
The largest and most visible modernisation project in the reporting period is the implementation of the ambitious expansion of the parcel locker network. As part of the development of various item delivery solutions tailored to the modern consumption habits of its customers, Latvijas Pasts began implementing its ambitious plan in August 2022 to install outdoor parcel lockers, with a view to expanding the parcel locker network with at least 120 new parcel lockers by the end of 2023. From August to the end of December 2022, almost 40 new-generation outdoor parcel lockers were installed in strategically advantageous locations for customers, including near LIDL stores, Circle K gas stations and elsewhere, where they are accessible at any time of the day, every day.
Since Russia’s invasion of Ukraine, Latvijas Pasts has continued to ensure the exchange of postal items with Ukraine and received recognition from the Universal Postal Union for the continuity of the exchange of items. Latvijas Pasts ensures the logistics of Ukrainian postal items through Riga to several European countries, facilitating faster processing and sending of these items. To provide support to Ukrainian citizens who have left their country due to the military conflict caused by Russia, a simplified procedure for receiving postal items with personal belongings has been established at Latvijas Pasts. To maximise the ease of opening of accounts in the Postal Settlement System, the opening process and procedures for Ukrainian citizens have been significantly simplified. Free money transfers to Ukraine with credit to a bank account are provided.
In response to Russia’s invasion of Ukraine, Latvijas Pasts was the first postal establishment in the world to release a block of three stamps and a special cover to support Ukraine. 50% of the proceeds from the sales of the stamp block are donated to the charity fund Ziedot.lv programme in support of Ukraine.
In 2023, Latvijas Pasts continues to pay special attention to improving the quality of services, ease of use and accessibility. Already after the end of the reporting period, in the 1st and 2nd quarter of 2023, several projects important for the development and sustainability of the company were implemented. Continuing the modernisation of the company, in January Latvijas Pasts purchased 105 new and modern electric bicycles for faster and more convenient delivery of postal items, and in March the company’s fleet was supplemented with 340 new, more environmentally friendly cars. These are not the only projects of Latvijas Pasts to achieve sustainability goals. In 2023, the company plans to set up a park of solar panels with a total capacity of 110 kW, and purchase cargo vans. Part of the vans will be electric cars that will be used to deliver items.
To keep pace with the changing customer habits and the growing need for cashless payments in society along with the possibility of making payments and purchases remotely, VISA payment debit cards became available to customers of the Postal Settlement System provided by Latvijas Pasts starting in April 2023. At the same time, the Latvijas Pasts Pay mobile app is now up and running.
About SJSC Latvijas Pasts
Latvijas Pasts ensures the widest availability of postal services throughout Latvia by maintaining more than 600 post offices and an extensive network of indoor and outdoor parcel lockers. The primary function of the company is provision of the universal postal service; Latvijas Pasts also provides commercial transport, express mail, parcel locker, payment, press subscription, retail and philatelic services. Latvijas Pasts is a wholly State-owned company with around 2,700 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
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