MaltaPost plc has released its results for the group’s financial year ending 30th September 2022, recording a pre-tax profit of €637,000. This represents a 72.9 per cent drop from the previous year’s €2.4 million, as macro-economic events continue to pile pressure on Malta’s leading postal services company.
The overall drop in profit primarily came about due to a 16.9 per cent decrease in the group’s revenue for the financial year, largely due to a significant fall in turnover from its postal activity. On the other hand, its overall expenses marginally decreased, with increases only being recorded in depreciation and amortisation expenses and share of results of associate fees. This came as a result of a number of “major cost reduction initiatives” that were implemented during the year, CEO Joseph Gafa’ explained.
Despite the difficult year, MaltaPost’s Board of Directors still recommended a net dividend of €0.04 per nominal €0.25 share. The attribution price is established at €1.09 per share. If approved at the Annual General Meeting, which will be held on 16th February 2023, the dividend will be paid on 16th March 2023 to shareholders on the company’s register at close of business on 17th January 2023.
Commenting on the results, Chairman Joseph Said explained that the group experienced “global upheaval” during the financial year as the COVID-19 pandemic continued, coupled with the start of the war in Ukraine, which made the period a “challenging one”.
“Macroeconomic and political events leading to major disruptions in the global supply chain and price hikes in conveyance costs resulted in an inflationary economic environment,” he said. In addition to this, the group experienced the impact of the first full year of Brexit and the EU’s imposition of VAT irrespective of value on, imports from non-EU countries, which had a “negative impact” on mail volumes and related revenue.
Mr Said also noted that the group is still keen to continue investing in its “client-facing and back-end digital solutions” to maintain its positive contribution to the local economy as a postal service. However, he added that this came at a “considerable cost”, especially since it “continues to carry an unfair financial burden by subsidising a number of postal services within the Universal Service Obligation (USO)”.
The USO aims to ensure that postal services are available to end-users in Malta at an “affordable” price. As the sole licensed Universal Service Provider of postal service in Malta, MaltaPost is tasked with collecting and delivering mail to every address in the country. Earlier this year, MaltaPost highlighted the “negative impact” that the USO has had on its financials for a number of years, leading to revisions of certain postal tariffs after “repeated requests” were made to the Malta Communications Authority (MCA) since 2018. While the group had welcomed the revisions, it had stated that they “still do not fully address the core issue; namely that the company continues to deliver a number of USO services at a loss”.
Mr Said reaffirmed this in this year’s annual report, remarking that while MaltaPost plays a “central role in the Maltese economy and in the daily life of the community”, its role also “needs to be accordingly acknowledged by the MCA, as the regulator of the postal services sector”.
“Persistently rising costs bring about the need for MaltaPost to request the revision of tariffs and terms with a view to have these brought in line with market realities. Unfortunately, the approval process takes so long, that by the time new tariffs and terms are approved, MaltaPost would have incurred financial losses on specific services covered by the USO,” he added.
Mr Said called for an “overhaul” of the present mechanism to ensure MaltaPost does not continue suffer financially due to the “long, drawn-out and outdated process”, with a “transparent, reasonable, and long-term solution” being needed to ensure the continued viability of the USO. He also confirmed that MaltaPost will continue to appeal to the MCA for the need of a change in approach, and that it needs to make a “fair and reasonable return on all the services it provides” in the best interest of its stakeholders and customer base.
“As a listed company that delivers postal services, we remain committed to fulfil the USO. While we are determined to provide an efficient and quality service to the community, a fair return to our shareholders and a secure workplace for our staff members, this may only be possible once the company is allowed to be fairly remunerated for all the services it provides,” Mr Said explained.
He remarked that the decision to continue to issue a dividend “irrespective of the level of profits registered” reflects the group’s “prudent approach”. However, Mr Said added that this “may only continue so long” as MaltaPost will not be expected to subsidise loss-making services that fall within the USO.
Mr Said concluded by thanking MaltaPost’s management team and staff for their “continued commitment and dedication” during the period, before adding that it is “confident that the group shall remain resilient and agile to respond to the new market realities”.
MaltaPost Group comprises MaltaPost plc and its subsidiaries Tanseana Limited, PostaInsureAgency Limited, IVALIFE Insurance Limited and Ciantar Brothers Limited. MaltaPost plc started operating in 1999 after it took over the postal services previously provided by Posta Limited.