Hongkong Post suffers losses in 7 years and misses fixed asset return targets for 9 years

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24th April 2024 – (Hong Kong) Hongkong Post has faced significant operational challenges, recording losses in seven out of the last ten years and consistently falling short of its fixed asset return targets, according to a recent audit report released today by the Audit Commission. The audit, focusing on the development of business operations at Hongkong Post from the fiscal years 2013-14 to 2022-23, highlights sustained underperformance and gaps in profitability which raise concerns about its long-term financial sustainability.

During the decade under review, the postal service encountered operational losses in seven years, with the return on fixed assets failing to meet the modest target of 1.5% in nine out of ten years. The situation appeared stark in fiscal year 2022-23, where Hongkong Post reported revenues of HK$4.089 billion but suffered operational losses amounting to HK$305 million, and a negative fixed asset return rate of -13%.

The traditional mail service sector continues to be a loss-making venture for Hongkong Post. To offset these losses, the company has increasingly relied on non-traditional services such as e-commerce, philatelic, and auxiliary services, which accounted for 48% to 56% of its annual revenue from 2018-19 to 2022-23. However, local e-commerce services recorded consistent annual losses during this period, with losses approximately three times the revenue, though there was a slight improvement nearing the 2022-23 fiscal year.

Moreover, the report disclosed that Hongkong Post’s e-Express services and the ‘Speedpost’ to 65 destinations, have been suspended for at least 24 months as of 31st January this year. Additionally, the ‘e-Express’ service to 11 destinations has also been paused for at least 25 months. The audit recommended that some of these services be swiftly reinstated.

In a startling revelation, the audit found that in January 2024, Hongkong Post’s online retail platform ‘ShopThruPost’ listed 21 luxury items, of which seven were discontinued but not removed from the website. Of the remaining 14 available items, nine had recorded zero or single-digit sales in the fiscal year 2022-23.

The audit also suggested that Hongkong Post could generate additional revenue through renting out advertising spaces at its facilities. As of 31st January, 2024, many advertising spaces remained unleased, including exterior walls and LCD screens at various post offices, highlighting a missed revenue opportunity.