Due to sanctions, Russian Post experiences its first $350 million loss in nine years

According to a March 30 RBC article, Pochta Rossii (Russian Post) recorded its first deficit in nine years at RUB 27.2 billion ($353 million).

During the boom years of the 2000s, Russian Post, a notoriously unreliable federal postal operator, was transformed into a cutting-edge, highly profitable service with a significant social impact in Russia. In cooperation with the state-owned VTB Bank, a banking service was also created based on its branch network across the country.

Nonetheless, the economic slump of the previous year and the sanctions have hurt its operations.

About half of the company’s income, or RUB 208.4 billion ($2.7 billion), came from postal operations, which saw a 4% year-over-year decline in revenue. Pochta Rossii, on the other hand, recorded a loss on sales of RUB21.9 billion, as opposed to a profit of RUB8.3 billion the year before.

A sizable chunk of the company’s RUB 16 billion rises in operating expenses can be attributable to logistics expenses and equipment maintenance.

According to a firm representative, the loss in revenue was mostly brought on by a decline in foreign mail flows brought on by payment issues, transportation restrictions, and the suspension of global brands in Russia.

Especially during the post-Christmas sales in January, pre-war Russians made extensive use of online shopping and snatched up deals in other European nations, prompting the Russian postal service to briefly shut down on multiple occasions due to the sheer volume of packages arriving from outside. Following that, Pochta Rossii implemented a specific price to better control the number of orders.

But, due to sanctions and the impossibility to use a Russian-based debit or credit card abroad, the amount of this foreign transaction has been significantly decreased. The Pochta Rossii’s cross-border income fell by RUB11.4 billion. In addition, the company’s expenses went up since staff pays went up and cost RUB 14 billion, according to RBC.

Russian Post’s CEO, Mikhail Volkov, recognized that the company had a difficult year and emphasized that the company’s major job for 2023 is to “reconfigure work taking into account new economic and geopolitical realities, reasonable cost reduction, and raising corporate revenues.” Volkov emphasized the need for social responsibility for the business.

Pochta Rossii was able to turn a profit in 2014 by bringing down operating expenses. However, the business was forced to reassess its strategy in 2022, which necessitated a reduction in administrative staff. The company is currently developing a new plan.