Post on 09-Jan-2017
www.ukrposhta.ua
FUNDAMENTAL TRANSFORMATION OF
UKRPOSHTA2017-2021
Ukrposhta today
«Ukrposhta» - appointed National Postal Operator with functions deriving from directives ofUniversal Postal Union
• 11 300 branches covering 29 700 settlements
• 75 000 employees 33 000 of postmen (3-d employer in the country)
• about 50 various services
• 13 000 of real estate units amounting 1,7 mln sq. m. (incl. 400 000 sq.m. under lease agreements)
• 3 700 car fleet
• Processing and delivery to consumers:
– Regular mail: 184M
– Parcels: 15M
– Pensions: 74M pensions and financial aid amounting to UAH 120B
– Payments: 181M processed payments amounting to UAH 25B
– Periodicals: 548M
2Note: all data for 2015
However, assets are significantly worn out
30% of car fleet with 0 км car mileage
80% of branches does not have computers*
100% manual sorting and low automation
*64% computers 5 year+
Ukrposhta is losing clients and market share…
74
95100
109
-32%
2014
83*
201520132011 2012
Pensions paid via Ukrposhtareduced 30% during 5 years
29
18(62%)
2013
72
51(74%)
49
69
11(38%)
16(22%)
56(78%)30
(61%)
20122011
19(39%)
76
15(20%)
61(80%)
Ukrpost
2014
Other operators
2015
18(26%)
Ukrposhta lost market share in the growing parcels market
parcelsmln.
pensions in mln units
*2014 decline 7,1 mln. units caused by annexation of Crimea and military aggression on the East of Ukraine
… and in fact was cutting personnel, branches and delivery routes
93,098,1 95,4
75,475,885,5
-23%
Employees ‘000
Number of branches‘000
11,312,712,9
13,7
-18%
11,4 11,2
Transport‘000
12
4,24,2
2011 14 113
3,7
201615
4,2
3,73,7
1 Y2014 compared with Y2013 due to military actions and territory annexation personnel decrease 3,4 th., branches 1,2 th., transport 0,4 th.
26 25 24 23 20 19Average mileage , th.km
4,43,9 3,73,7 3,94,0
RevenueUAH M
2541
-4
273626
Net incomeUAH M
2016151413122011
New management team has launched the transformation of Ukrposhta…
… with several quick wins already realized
Saving on procurement of UAH 55M (more than 2015 net income)
Retail revenue growth of UAH 21M in 3 months
Renegotiation of wholesale prices with Top-10 suppliers increased margins by UAH 10M (annual run-rate)
Purchased 3500 new computers for regional offices and branches
Execution of corporatization plan: registration of JSC “Ukrposhta” and new Supervisory Board expected in 1Q17
Cooperating with EBRD on strategy development and optimization of logistics network
Launched service quality improvement program with employee trainings and renewed service standards
We propose to transform the company through aggressive revenue growth
202116 171514 1918 202013
Profitability,%
RevenueUAH B
Ukrposhta growth and development will also have a significant effect on the overall economic
• Increase of access to financial services of the “unbanked” population
• Promotion of cashless economy
• E-commerce driver
• Increased access to public services
• Development of infrastructure
Mail and parcels
Other1 Retail2
Financial Services
1% 0% 1% 0% 1% 1% 7% 10% 13%
1 Logistics and fulfillment, advertising, government services, etc2 Accounting only for our sales commission (margin)
мільйонники дуже великі великі середні малі смт села
Netw
ork,
%Укрпошта
Банки
Ukrposhta is uniquely positioned to provide financial services to the 47% on unbanked Ukrainians
Cash economy
27 000 of settlements
15 mln of people
• Absence of financial infrastructure• Cash operations• Inaccessible basic financial services • Poor financial literacy • Poor SME access to
Ukrposhta
Banks
Metropolis Large city City Large town VillageTown
Banks Ukrposhta
Coverage
localitypopulationlocalitypopulation
Significant investments are needed to drive our revenue growth
70
128
107
111
21
507
Mailbox replacement
Total
ATMs and payment terminals
Logistics and sortingcenters
Transformationsupport
IT
38
POs refurbishment
31
Car and truck fleet
CAPEX 2017-2021, USD m Напрямок використання
▪ Replacement of missing and broken mailboxes (20-30%)
▪ Reduction of average car fleet age to 7 years (~4,000 new cars and trucks)
▪ Switching to 5-7 logistics and sorting centers from current 35
▪ ~2500 ATMs and payment terminals for financial services
▪ PO computerization, ERP/IT systems, network security
▪ PMO support, re-branding, consulting
▪ New format for 2000 post offices and refurbishment of sub-standard offices
We see cooperation with international donors in several key areas
1. Transport fleet modernization
2. Logistics and sorting centers optimization
3. Service development and post office improvement
4. Environmental, energy efficiency and safety programs
Mixed insourced/outsourced modelAs-Is Setup1
Ukrposhta’s car fleet requires urgent modernization
2
• ~ 80 million km total annual mileage
• 99% own fleet dependency• 14 years avg. vehicle age• 30% of vehicles are not operational
• Optimized mileage due to GPS tracking system
• 80% insourced / 20% outsourced• 7 years avg. vehicle age• Green fleet solutions introduced
Introducing vertical control2As-Is Setup1 Physical network optimization3
Planned logistics network development
Illustrative Illustrative Illustrative
• 35 hubs incl. central 10,000 sq. m. Kyiv hub that handles 60% of volumes
• 110 local sorting terminals
Hubs
Local terminals
Local terminals
Hubs
• 5 regional centers to coordinate logistics activities with 6-8 hubs each
• Optimized network of local terminals
• 4-5 hubs
• 30-40 x-docking depots
Q1-Q3 2017 Q4 2017 - 2018
We aim to streamline logistics operations to shift from setup with unreliable transit times to day-definite offering with several service levels
To Be
• One stop shop
• Marketplace agents services
• Clients savings accounts management
• Postman as a mobile manager
• Cashless economy: Any-Any, trade & internet acquiring
• Post-ID and address registry management
As Is
Service development and post office improvement
Postal sector is participant of EMMS program
IPC’s Environmental Measurement and Monitoring System (EMMS) program is a sector wide initiative acting to mitigate the impacts of global climate change via a collaborative approach to reduce carbon emissions.