MaltaPost’s CEO and Chairman, in the company’s full year annual report for the year ended September 2021, urged Malta’s authorities to assess its request to review postal tariffs for essential services it provides under the Universal Service Obligation.

“We continue to play a central role in the Maltese economy and in the daily life of the community. However, MaltaPost remains unfairly expected to deliver certain services at significant financial loss,” MaltaPost Chairman Joseph Said in his statement

The Chairman acknowledged that the situation has been worsened by the continued fall of letter mail, more so since the outbreak of the pandemic. Earlier this year, a “virtually insignificant” revision of postal tariffs was introduced, however MaltaPost “still awaits the approval of the Malta Communications Authority to implement pricing revision requests, some of which were first proposed three years ago.

“Therefore, such a tariff revision is necessary to address the loss-making postal services we provide under the Universal Service Obligation. These losses have been accentuated as a result of the year-on-year shrinkage in letter mail volumes, as well as to cushion the impact of increasing labour and operating costs,” Mr Said said.

He stressed that the tariffs of mail services in Malta remain significantly lower compared to “all other European jurisdictions,” even though Malta is an island-nation totally dependent on the more expensive air connectivity routes.

CEO Joseph Gafa’ also commented unfavourably on the issue, stating:

“While we reaffirm our commitment to make postal services more accessible to all, we cannot be expected to do this at a financial loss and in an environment wherein tariff revisions cannot be carried out unless and until these are approved by the Malta Communications Authority”.

He added that MaltaPost will continue to request that the Authority revise its pricing of the company’s loss-making services, and that a three-year tariff revision programme be agreed upon.

The Malta Communications Authority is the national regulatory body for Malta’s postal sector, with its remit including the ensuring of the sustainable provision of a universal postal service, while providing all postal service users with the choice offered by a liberalised market.

On its part, MaltaPost is designated as the sole universal postal service provider.  The Postal Service Act sets out the description of the universal service that MaltaPost as the designated universal service provider (USP) is required to provide.

A challenging year ahead

On his outlook for 2022, MaltaPost CEO Joseph Gafa’ cautioned the company is set for another challenging year, where forecasts are difficult to make following the onset of yet another COVID-19 variant.

He noted how the pandemic has accelerated postal trends seen from previous years, with parcel volumes rising and letter mail continuing to decrease.

“This reaffirms the belief that our strategy to rebalance our service offering towards the parcel sector is the right one.”

Mr Gafa’ said the company will continue to manage the non-postal sectors of the business to further supplement its core activity with distinct revenue streams.

“We are confident that our diversification into logistics, document management, indusrance and financial services bodes well for the future and shall provide a fair return on investment. The foundations are being laid to make the company stronger,” he said.

Financial performance

MaltaPost registered a group profit before tax of €2.35 million, a decrease of 15 per cent when compared to the previous year’s €2.78 million.

Group total revenue for the year increased by 11 per cent to €37.93 million, with that of postal revenue remaining constant at 87 per cent. Oher non-postal income arose from document management services, bill collection, financial services and insurance.

Group total expenses stood at €35.82 million, compared to 2020’s €31.72 million, driven by increases in international postal tariffs payable to postal operators at destination as set by the Universal Postal Union, as well as increases of over 50 per cent in airfreight costs. MaltaPost also experienced increases in the local cost of labour as per its Collective Agreement, coupled with the challenges continued to be faced in the recruitment of staff.