Mark Barnes upbeat on Post Office's return to profitability

The South African Post Office (Sapo), which has suffered big losses in recent years, still hopes to return to profitability by 2018.

Briefing MPs on Sapo’s corporate and annual performance plan on Tuesday, CEO Mark Barnes said the state-owned entity was aiming to return to profitability by 2018, be a leading provider of postal, logistics and financial services and be a key driver of the government’s service delivery objectives.

Sapo, which is backed by a government guarantee totalling about R4bn, has struggled to turn its fortunes around following years of mismanagement and service, maladministration and allegations of fraud and rising debt.

Barnes, who assumed his role at the beginning of 2016 with a brief to revive the ailing company, said the net financial position still remained challenged with a year to date net loss of R1.33bn, with a negative variance of R186m for the year against a targeted net loss of R1.15bn. In the previous financial year, Sapo recorded a loss of about R1.5bn following a crippling strike that resulted in the loss of major clients and reputational damage.

"This has been a difficult trading year that still leaves Sapo challenged to achieve the existing baseline revenue targets while creating a conducive environment for growth," he said.

Despite the seasonal renewal of post boxes, total revenue of R4.73bn performed marginally below the prior year’s R4.83bn. The revenue lag would result in a R1.14bn shortfall to match operating costs.

However, mail revenue stabilised with early signs of customer confidence returning to Sapo, said Barnes. He said the biggest factor affecting the postal business was technological advancement. Globally, postal operators were experiencing declines in physical mail volumes, attributed to digital substitution. In comparison to its African and international counterparts, Sapo was still reliant on mail revenue, said Barnes.

Some of Sapo’s challenges include the entrance of new players in the courier sector and outdated IT infrastructure.

Barnes said a precondition to achieving the envisaged revenue mix was the corporatisation of Postbank and growing e-commerce revenues.