Namibia Post Limited (NamPost) saw its annual profits plunge by 15% in the year ended September 2023, weighed down by declining mail revenue and rising financial and operational costs.
The state-owned postal operator, however, remained profitable and posted revenue growth of 9%, according to its financial results.
“Good progress was made on positioning NamPost as an employer of choice in line with our strategic objectives, but the year was characterised by significant cost challenges and limited opportunities,” says NamPost chief executive Festus Hangula.
Profit before tax dropped to N$63,1 million, compared to N$88,6 million in 2022, while profit after tax declined by 15%.
The decline in profits was largely driven by a 13% drop in mail-related revenue, a trend that has been accelerating since the Covid-19 pandemic.
The contribution of mail to overall revenue shrunk from 17% in 2019 to just 8% in 2023.
“Unfortunately, the mail-related revenue declines have been more pronounced during and after the Covid-19 pandemic. This is a global trend affecting postal operators worldwide,” Hangula says.
NamPost’s financial services arm also took a hit, with a 30% increase in the cost of funds due to rising interest rates.
This squeezed margins as the company is unable to fully recover the higher cost of deposits through lending activities at similar rates.
“Since NamPost does not use the deposits for lending, this cost could not be recovered through lending at higher rates as banks would normally do,” Hangula says.
The company also faced challenges in its courier business, experiencing pressure from fleet renewal costs driven by currency depreciation and rising insurance premiums.
Additionally, petrol price increases and lower parcel volumes further burdened the division.
To reverse the slide in profits, NamPost has outlined a four-pronged strategy for the year ending September 2024, focusing on financial sustainability, customer centricity, business transformation and performance culture enhancement.
“We are confident that by implementing different measures, we can return to stronger financial performance and continue to provide essential postal and related services to the Namibian population,” Hangula says.
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