Guernsey Post is reporting an operating loss for 2010/11, having taken firm and prompt action to ensure that it was not worse. The company's underlying performance improved, however, and there is a clear strategy in place to return to profit.
Guernsey Post made an operating loss of £0.9m in 2010/11 as a result of higher charges from Royal Mail, the first decline in bulk mail volumes for twenty years and the increased cost of £0.6m for providing its defined benefit pension scheme under accounting rules.
Richard Hemans, Finance Director explained:
"Although we are announcing an operating loss, the core performance of the business actually improved during the year. We made an underlying operating profit of £0.2m thanks to our cost reduction initiatives and strong performances from express and mail coming into the island for delivery.
At the start of the year we were facing an operating loss of £2.3m because of factors such as the decline in bulk mail volumes and the legal dispute with the Office of Utility Regulation (OUR). We took decisive action, however, to reach a settlement with the OUR, to lower both our payroll and non-payroll expenditure and to focus on our core business", continued Mr Hemans.
Guernsey Post is expecting 2011/12 to be another difficult year, but the company enjoys a healthy financial position and has put in place a clear strategy to address the triple challenges of volume declines, threats to Low Value Consignment Relief (LVCR) and growing competition.
Boley Smillie, Chief Executive said
"We will continue to cut costs, to acquire new customers with innovative, competitive services and to take advantage of the opportunity the internet offers in terms of Packet and Parcel Deliveries."