Czech Post introduced its restructuring plan
- Czech Post’s business activities to be divided into three business units, each with its own financial management and responsibility.
- Return to profitability in 2021.
- The 3,200 service points in the Czech Republic to be preserved, but redesigned: some to be transformed to self-service counters.
- Czech Post’s position in parcel logistics to be maintained, with an increase in the annual parcel network capacity from 45 to 60 million.
- The restructuring project should result in simpler and faster operations, more reliable delivery services, and zero waiting time at post offices.
Czech Post’s operating loss for 2018 exceeded one billion Czech crowns. It was not the first time the company suffered a loss, but it was the first time it was openly admitted without making up for it by selling property to achieve a “positive zero.”
“Czech Post has suffered losses for a long time, with the actual loss for the past year exceeding one billion Czech crowns. Unless we make systemic changes in the corporate structure, Czech Post will cease to exist within several years,” said Roman Knap, Czech Post’s Director General.
The restructuring project is to adapt the services rendered by Czech Post to suit the current market trends and customers’ wishes. The customers should benefit from simpler and faster services including even faster pickup services without wasting time queueing. The employees should get a pay increase adequate to the required higher qualifications of postal staff. They will be necessary, as the company intends to invest into automation and digitisation and will need staff with corresponding skills.
Czech Post will use the restructuring plan to return to profitability in 2021 as a modern, low-cost group of several divisions with separate financial management and responsibility. The plan clearly defines the steps necessary to achieve this goal.
Clearly defined division of Czech Post into separate business units
The key step is to divide the company into three business units under the name of Czech Post Group: Postal Services for the Government; Logistic Services; Financial and Sale Services. Each business unit will have a separate financial management and responsibility. This division will also draw a line between profitable and unprofitable services and products.
“The restructuring project is to help is return to profitability in 2021. If nothing is done and the current trends continue, the loss generated by Czech Post in 2022 would exceed five billion Czech crowns,” added Roman Schanner, Czech Post’s Financial Director.
Postal Services for the Government
Services for the government account for a significant part of Czech Post’s operations and spendings. The company therefore needs the annual compensation provided by the government to be increased to 1.5 billion Czech crowns at least until 2022. Czech Post will maintain the required nationwide network of 3,200 service points. However, they will be redesigned to better suit customers’ needs, use the possibilities offered by modern technology, and increase efficiency while cutting costs. The planned self-service counters should help customers obtain postal and financial services without the presence of postal personnel. This automation will save money.
“The existing nationwide network of 3,200 service points will still be maintained, only the design will change. They will be partly transformed into Partner Post Offices and partly into self-service counters. But they will continue rendering the basic postal services,” said Martin Vránek, Czech Post’s Sales Director.
Logistic services meeting customers’ needs and habits
The letter mail segment has been decreasing by an annual 10% on average. Letters have been replaced by electronic communication, whose popularity among customers has been steadily growing. This is behind the downward trend in Czech Post’s revenues from this segment. On the contrary, the parcel mail segment has been growing by an annual 12-14%.
“Czech Post must use this business trend. The aim is to increase the parcel market segment to 40% and to reach the limit of 60 million of parcels transported in 2022,” commented Petr Cinkl, Logistics Director.
Delivery services should also be optimised so that the customers can benefit from better services and the employees from improved working conditions. Some of the letter delivery personnel will be transferred to the parcel delivery network. The experience shows that parcels matter more than letters to customers. It takes on average up to five days for a customer to pick up a registered letter at the post office, but parcels are required almost instantly. The parcel logistic network will therefore be strengthened.
Financial and Sale Services
Czech Post is highly experienced in providing financial services. They account for a considerable part of its income. In many places in the country, the post office is the only place where people can get financial services. The company will therefore continue to provide them. The service digitisation plan includes new services such as eSIPO, eMoneyOrder, eDutyStamp.
This business segment requires an overall restructuring to increase the income from the sale of additional products and services. The new sales will be based on a multichannel concept, open to the key retail customers, and using to the fullest the unique characteristics of Czech Post’s distribution network.
The Contact Services, available at certain post offices both to commercial customers and to the government, should generate new income.
The same applies to cash services provided to the banking and retail sectors, where a new Cash Centres concept is to be created to meet the overall market needs.
Česká pošta, s.p.