Jersey Post reports small profit despite declining business

Thursday 16 June 2016

Jersey Post appears to be scoring small victories in the battle against a worldwide decline in traditional mail, with the island’s postal service reporting an operating profit of £1.27 million for 2015.

Profits for the year rose 5.5 percent before pension charges and taxation. After taxation and pensions, profit was £245,000.

Chairman Mike Liston said the results confirmed the “robustness of our rapid recovery from the sudden loss of Jersey’s fulfilment industry” in 2012 - which resulted in a loss of £30 million in annual revenues.

But even with annual turnover of £38 million in 2015, revenues are only just over half of what Jersey Post saw during the peak of the Low Value Consignment Relief era.

The losses that followed the withdrawal of LVCR in the UK have been somewhat countered by a “rapid increase in parcel and packet volumes as consumers continue to migrate to shopping online”, according to the postal service’s annual report.

Parcels now account for over 45 percent of Jersey Post’s revenue but only 10 percent of it volume.

Even this growth is insufficient to counter the plummeting letters business, however. “Whilst growth in parcels has been significant, for the revenue earned from parcels to replace that from letters then the price of an up to 30kg parcel to the UK would need to be nearly three times what we charge now,” the report said.

The island’s postal service also saw an increase in customer satisfactions levels in 2015 following a £3 million investment its services last year. A survey of some 5,000 islanders showed an increase in key approvals for postal workers, overall customer service and the postal network - with 93 percent of respondents rating their postie “good” or “very good”.

“We continue to focus on efficiency and our core objective of delivering a high quality postal service for a reasonable price,” said chief executive officer Tim Brown. “We have experienced dramatic change in our business environment and the customer culture, but we believe that we have laid the right foundations to build a modern, sustainable business for many years to come.”

Among the improvements to postal services made during 2015 were the refurbishment of the Broad Street and Rue des Pres customer points, the introduction of round-the-clock locker banks in key island locations and deployment of hand-held and in-vehicle devices to enhance tracking and trace services.

Despite improvements, Jersey Post expects 2016 to be “one of the most challenging years for postal services."

The postal service faces a “pernicious threat to its longer-term survival”, Mr Liston said in his Chairman’s statement. “This arises from the decline in their core letters service, which postal operators everywhere are suffering, as the rise of the internet and use of smart phone mobile devices changes the way the world communicates. The volume decline Jersey Post’s letters business of some 60 percent in the past decade is similar to that seen across the globe.”

The report added that while the future of the Island’s logistic industry is still uncertain but Jersey Post is “introducing new products and services, and developing income streams off-Island, to meet its longer term business strategy to modernize the business and make it more relevant to customers."