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After Years of Huge Losses: Israel Post Finally Presents Profit | Israel Hayom

2023-05-29T10:00:33.239Z

Highlights: Israel Post moved to a net profit of NIS 2023 million in the first quarter of 23 and a growth of 14% in revenue. After three years in which it lost NIS 3.1 billion cumulatively. More layoffs are planned. Chairman of Israel Post: "A year after the company was in a state of collapse and on the verge of insolvency, it is presenting results that will provide a tailwind to the privatization process. The new management headed by David now includes a professional layer of managers, with proven business experience, who have restored the trust of the financial system"


Within six months of approval of the recovery plan for Israel Post and within 3 months of approval of the financing agreement for the plan by the Knesset Finance Committee, the company moved to profitability, and was many months ahead of its goals • After cumulative losses of NIS 1.9 billion in 3 years: Israel Post moved to a net profit of NIS 2023 million in the first quarter of 23 and a growth of 14% in revenue


The Israel Postal Company today published its financial results for the first quarter of 2023, and reported a growth of 14% in revenue and a net profit of NIS 23 million, after three years in which it lost NIS 3.1 billion cumulatively.

Within six months of approval of the recovery plan for Israel Post and within 3 months of approval of the financing agreement for the plan by the Knesset Finance Committee, the company moved to profitability, and was many months ahead of the goals of the recovery plan.

Ahead of the goals of the recovery plan. Israel Post (archive), photo: Jonathan Shaul

The significant improvement in the company's financial results derives from the implementation of a comprehensive turnaround plan that includes, inter alia, the retirement of employees, changes in the regulatory rules applicable to the company, and the receipt of financing for the implementation of the plan from the state in return, inter alia, for the transfer of the company's real estate assets to state ownership.

As a result of these actions, Israel Postal Company is showing a marked improvement in its financial results and ending the first quarter of 2023 with a net profit of NIS 23 million compared with a loss of NIS 72 million in Q<> <>.

The company recorded a capital gain of NIS 15 million in respect of the assets transferred to the state in this quarter in accordance with the asset sale agreement approved in December 2022.

More layoffs are planned. Israel Post (Archive),

The company reports a third consecutive quarter of revenue growth. The company's revenue increased by 14% to NIS 2023 million in the first quarter of 436, an increase of NIS 54 million compared with revenues of NIS 382 million in Q3 <>. Revenues were positively impacted by significant growth in the postal and retail sector and in the Postal Bank. Revenue from trade services (international shipping) declined slightly, by less than <>%.

The Company reports positive EBITDA (earnings before interest, taxes, depreciation and amortization) of NIS 63 million, and an EBITDA rate of 14% in Q2023 17, compared with negative EBITDA of NIS <> million in Q<> <>.

Excluding one-time events, the Company had a positive cash flow from operating activities of approximately NIS 2023 million in the first quarter of 18, compared with a negative cash flow of NIS 80 million (neutralized) in the corresponding period.

The company reports a third consecutive quarter of revenue growth. Vehicle in the Israel Postal Service (archive), photo: Yehoshua Yosef

Mishael Vaknin, Chairman of Israel Post: "A year after the company was in a state of collapse and on the verge of insolvency, it is presenting results that will provide a tailwind to the privatization process. In the coming weeks, we will begin – together with the Companies Authority – meetings with potential investors, in order to realize as soon as possible the privatization goal, which is critical to the company's future and to ensure a high level of service to the public over time."

Vaknin added: "The results signed by the company's management, headed by CEO David Laron, who was appointed to his position only on June 1, 2022, prove that in proper and professional management, even in a government company, a transformation can be carried out within a short period of time, which includes assimilating a culture of business conduct and professionalism that replaces political appointments and wastefulness. The new management headed by David now includes a professional layer of managers, with proven business experience, who have restored the trust of the financial system and are ready to welcome new investors."

David Laron, CEO of Israel Post: "In an extensive and intensive move over a period of only a few months, we implemented the turnaround plan for the company and moved the post office from a rapid dive into insolvency, profitability and growth. Only six months after the signing of the recovery agreement, and three months after approval of the financing and regulatory changes required to implement the plan, Israel Postal Company is a stable and profitable company with a clear strategic plan, and ready for privatization."

Keren Etzlan, CFO of Israel Post: "At the conclusion of the first quarter of 2023, following the removal of the 'going concern' note from the annual report, we exceeded revenue and expense forecasts in all operating segments and moved to bottom line profit for the first time. This is also reflected in the trust we receive from the financial system. We feel comfortable with a forecast of continued revenue and profitability growth over time."

First phase of layoffs

As part of Israel Post's turnaround plan and the proactive actions taken by the company's management to streamline and curb losses, the number of jobs at Israel Post was reduced from an average of 5,000 jobs in the first quarter of 2022 to an average of 4,261 jobs in the first quarter of 2023. Of the reduction of 729 jobs, 650 are part of the first phase of layoffs under the recovery plan and collective agreement signed in September 2022 and approved in December 2022.

In addition, the company reduced tens of thousands of overtime hours in the first quarter of 2023 compared to the corresponding quarter, as a result of streamlining work processes, reducing operating hours and reducing retail deployment. Another phase, which includes the retirement of about 400 employees as part of the recovery plan, is expected to be implemented during the second quarter of 2023.

In February 2023, the amendment to the Postal Company's license was published, and the Company adapted the new deployment plan for the postal units according to the terms of the new license. During 2022, about 75 postal units were closed, and since the beginning of 2023, about 30 additional units have closed. In the coming months, the streamlining program will be completed, and the company's retail chain is expected to have about 350 branches nationwide.

Application required

During the first quarter, the Israel Postal Company began the implementation required of it as part of opening the postal market to competition as part of the postal reform. The company is working to open mail distribution centers for competing use, according to an outline, conditions and schedules defined by the Ministry of Communications.

Most of the changes in the framework of the Israel Post recovery plan have already been implemented, but additional specific tariff updates are expected from time to time, including price increases for lossy services, alongside price reductions against the background of increasing competition in the postal market and discounts on financial services for populations supported by benefits. In addition, the company is expected to launch additional digital services, at a reduced price compared to purchasing at the porthole.

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Source: israelhayom

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