Debt of Russian Post in 2022 was 133 bln rubles, company managed to avoid default - General Director

MOSCOW. July 18 (Interfax) - The accumulated debt of the Russian Post at the end of 2022 reached 133 billion rubles, but the company managed to agree with creditors on restructuring and avoid default, the company's CEO Mikhail Volkov said at a meeting of the Federation Council Committee on Economic Policy on Tuesday.

"2022 was, I'm not afraid of the word, catastrophic for Russian Post. The Post Office had a record loss of over 30 billion rubles, and a large accumulated debt of 133 billion rubles, with most of it having no resources for return or repayment," Volkov, who has headed Russian Post in January 2023, said.

The company now has to spend about 16 billion rubles annually servicing its debt, including servicing leasing. "Even in its best years, the company never earned enough money to service interest," Volkov said.

"We managed to avoid a default on external obligations. The fact is that in the first half of the year alone, the company was obliged to pay more than 30 billion rubles on external obligations. And if nothing had been done, we would have run out of money to pay salaries in May. We successfully negotiated with all our creditors," Volkov said. Now the company has already reduced its debt by 3 billion rubles, he said.

Volkov also said that Russian Post has launched a financial recovery program. "We are getting rid of inefficient costs. We have optimized managers 20% throughout the country. In the central office, here in Moscow, in fact, we have cut our costs 25%," Volkov said.

The company plans to increase revenues through new services, primarily in the field of e-commerce, as revenues from traditional services are falling, he said.

We have concluded agreements; we are developing cooperation with market leaders; with the largest marketplaces. The task is to give most of the branches, in addition to providing traditional postal services, a new meaning by the end of the year, so that through us, among other things, they can deliver orders from marketplaces and online stores," the head of Russian Post said.

He also noted that the effective operation of the Post Office, among other things, is hindered by regulation, which positions the postal operator in conditions which are disadvantageous compared to private companies. "We have quite a lot of regulations that determine the number of branches, where and how we should work regardless of whether it is economically beneficial for us or not," Volkov said.

So, for example, unlike private companies which can open pickup points on a franchise model, Russian Post does not have the right to do so. In addition, rather stringent requirements are imposed on the Post in terms of anti-terrorist protection for its facilities.

"Unequal regulation in this area, among other things, does not allow Russian Post to develop efficiently," the head of the company said.