Isle of Man Post Office has made a profit for a second year in a row.

It went into the black for the first time in 2020-21 after posting three years of losses.

The Post Office’s latest annual report, to be laid before next month’s Tynwald, shows it made a profit of £1.53m in the last financial year, slightly down from the £1.61m profit posted in 2020-21.

Its turnaround has been attributed to increased parcel volumes during the Covid pandemic, but also reforms which included reducing letter deliveries from six to five days a week and bringing in new employment terms and conditions, including major changes to the pension scheme.

Isle of Man Post Office’s annual plan will also go before next month’s Tynwald. This talks of the organisation becoming a parcel-led delivery company.

But the last annual report reveals the mails division saw a 3% fall in revenue. A 4% drop in letter volumes is described as ‘unsurprising’ but parcel volumes decreased by 6%.

Chief executive Simon Kneen said this drop in parcel volumes is largely due to the partial reversal of buoyant online shopping trends seen during the pandemic.

He notes: ‘Inbound parcel volumes remain volatile and it is challenging to understand with certainty how these trends will develop as we look to the future.

‘Notwithstanding customer habits, competition for doorstep parcel delivery remains fierce. Online retailers have the propensity to switch their delivery partners at short notice.’

The retail network continued to be loss making at a broadly similar level to the previous year.

transactions

Transactions at sub-post office counters continued to decline, reporting a fall of 12% over the year.

Vice chairman Diane Kelsey MLC said: ‘I am pleased to report that once again the business has returned a profit, which is testament to the efforts of all colleagues for their sterling commitment and diligence in what was another challenging year operationally.

‘However, this is no time for the business to rest on its laurels.

‘The challenges for those in the postal industry remain, with digitisation, volatile parcel volumes, letter traffic in irreversible decline, rising operational costs, and the changing expectations and needs of customers.

‘Additionally, the unfettered “gig economy” continues to have a detrimental effect on our business.’

Turnover increased marginally in 2021-22 from £23.4m to £23.5m, while net asset value was £27.1m, up £7m from the previous year thanks largely to a £5.6m favourable remeasurement of the pension scheme.

That scheme is now showing a £3.8m surplus compared with a £0.9m deficit in 2021 - although on a actuarial funding basis it is still in deficit to the tune of £2.4m.

The debate over whether Isle of Man Post Office should offer banking services remains in the background, notes the annual report.

It says there continues to be mixed opinions in Tynwald on the future of cash as many high street banks choose to reduce their retail offering in the island.

This year will see the introduction of new ‘demand responsive’ services including the ability for customers to purchase postage online, print labels at home and drop parcels into parcel boxes.

‘This innovation will make it much easier and convenient to access postal services at a time that suits customers,’ said Mrs Kelsey.

She welcomed Treasury’s decision to continue not to demand a levy from profits for the financial year.

But she added: ‘Notwithstanding our results for the period, it is paramount that IoMPO is able to retain its reserves to fund the transformation programme, continue to subsidise the retail network, and to provide a cushion against the volatility of its defined benefit pension plan.’