“From subsidies to margin, from the office towards profitability” – this is how the president of Poczta Polska, Sebastian Mikosz, sums up the first year of his term. In an interview with Bankier.pl, he talks about reducing losses, a digital transformation plan worth half a billion zlotys, difficult personnel decisions and a revolution in the company's operating model. – We stop thinking like an institution that will always get money from outside – he emphasizes.
Katarzyna Wiązowska, Bankier.pl: You have been the president of Poczta Polska for a year. What has been successful during this time and what has not yet been achieved?
Sebastian Mikosz, president of the Polish Post: I will say mischievously that we managed to survive. But seriously – we reduced the loss 3.5 times year-on-year. It may sound paradoxical that we are bragging about the loss, but it is really much smaller than a year ago. We have certainly also improved liquidity. I do not hide the fact that – on the one hand – the net cost refund finally obtained from the government, i.e. money that the Post Office had been waiting for for several years, and on the other – the consent of the European Commission for public aid helped. Although it sounds as if we were receiving a subsidy, in fact it is a refund for a service that is usually received about a year and a half after its performance.
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The Transformation Plan includes, among other things, reducing operating costs, the effects of which are already beginning to be visible. In addition, we are consistently building a team that will deal with this transformation. Unfortunately, all these changes are not yet visible to the client, because accelerating the investment process and its implementation in such a large “ship” as we are is relatively long. My ambition is – going into the future – for Poczta Polska to no longer be talked about, so that we can simply do our job.
Profitability is the most important thing
KW: Is it true that huge savings are needed for Poczta Polska to be self-financed?
SM: The post office cannot think in terms of savings, but of margins. Up until now, we have never operated like a joint-stock company, but like an institution that will always receive an injection of money from outside. In the meantime, we have to start thinking in terms of margins, which requires a change in the culture within the company. Let me give you an example – up until now, we have been thinking in terms of a controlling system, which by definition distorts the picture, because e-deliveries are attributed to postmen's costs. We should not have ambitions to grow, but to be profitable. And to be profitable, we have to operate with a margin in mind.
KW: Is there a chance of that?
SM: This is already happening. Otherwise I would not have taken on this task. For the employees of the Post Office, real change is connected, on the one hand, with the belief that it is possible at all, but also with the determination to find one's place in the market and use one's own potential. If only to become completely independent from the universal service, because it will fade and we already know it. This is our greatest challenge.
Selling financial products on a large scale
KW: Is Poczta Polska planning any new services in the near future?
SM: Yes, we are soon going to accelerate the sale of financial products on a large scale, using the huge advantage of having an extensive network of branches. We will definitely also intensively develop the pallet service. It may be less visible to the customer, because it is B2B, but we are doing very well today. We are also in the process of intensive work on our role as a cash operator. Thanks to this, wherever banks, companies and other organizations do not want to deal with cash, we will undertake it. So we will go against the current of trends. When others want to get out of cash – we want to operate with it. When others give up having branches – we want to be stationary, as close to the customer as possible. The point is to fill a niche that will always exist, and for which we are prepared through many years of investment and the fact that we have at least a few branches in each commune.
KW: So you do not plan to limit the number of branches?
SM: No, we don't intend to do that. Quite the opposite. I would like their network to be expanded, assuming of course that they are profitable.
Digitization for half a billion?
KW: Many of the company's plans involve investing in IT and automation. What are your plans for implementing new technologies?
SM: For us, the biggest changes will take place this year and next year, when we start investing in digital systems and implementing them. A huge change is ahead of us, concerning the centralization of the postal system, the so-called “single window”, i.e. the Poczta+ project. Investments in the financial and accounting, HR and logistics systems await us. Unfortunately, with regret and frustration, I have to say that the last 20 years have been a time of complete lack of investment in postal systems. The latest one dates back to 2007. This is a huge challenge for the next year and a half. Most tenders and purchasing processes are already underway. Another ten are ahead of us. Our purchasing system is constructed in such a way that in some parts we have to use the Public Procurement Act, and in others we can do it through a purchasing procedure. This means that such a purchase cannot be made faster than in a few weeks, and sometimes it takes up to 10 months. We estimate that this will cost between PLN 400 and 500 million. It is only necessary to remember that today, purchasing IT systems is rather signing a multi-year service agreement, which includes integration costs. This does not mean that Poczta Polska has to spend PLN 500 million in a year, but that it should contract and plan such services in time.
Staff costs were too high
KW: Poczta Polska planned to lay off 9,000 people, but ultimately 6,000 employees left the company as part of the Voluntary Redundancy Program and group layoffs. What about the rest?
SM: We are currently monitoring and analysing the situation. Staff costs accounted for around 60% of general costs – this is definitely too much. That is why we introduced the Voluntary Leave Programme for those employees who wanted to take the package provided for them and leave. Those who did not decide to do so were subject to group layoffs. However, it must be remembered that Poczta is still a very large company, with a specific demographic structure, which is constantly transforming. We have many employees who change jobs, retire or change the forms of their contracts with us. I want to emphasise that our goal is not and has never been layoffs per se, but achieving the budget target. If this happens naturally, even better.
KW: Thank you for the interview.
