SA Post Office to return to profit in 2018

South African Post Office. (Duncan Alfreds, Fin24)
South African Post Office. (Duncan Alfreds, Fin24)

Johannesburg - State-owned South African Post Office (SAPO) should return to profit in 2018, boosted by new revenue streams such as financial services products, chief executive Mark Barnes said.

Many of South Africa's 300 or so state entities are a drain on government finances and rating agency Standard & Poor said on Wednesday they threaten the nation's credit rating, already at the lowest investment grade.

SAPO, which is supported by a R4.4bn state guarantee, is expected to record a loss of more than R1bn and in the 2015/16 financial year. In the previous financial year it lost R1.5bn after industrial action prompted major clients to pull out.

"Our ambitions here are to get back to where we were (profitable) in two years' time in terms of revenue," Mark Barnes told Reuters in an interview on Tuesday. "We expect to turn profitable in 2018."

Barnes, who was appointed in 2015 to staunch SAPO's losses, also said it was in talks with banks about obtaining bridge loans pending a R650m capital injection from the government.

"We have a scepticism bridge to cross before the government can change its mindset from seeing us as an unnecessary cost to an investment opportunity," Barnes said.

Barnes said the company, which is awaiting a full banking licence from the South African Reserve Bank, would be boosted by new financial services products such as lending.

A banking licence would allow SAPO to use its 1 500 branches to provide credit and other financial services to millions of people without assets as part of the government strategy to extend banking to the poor.

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