Emirates Post plans aggressive expansion ahead of share offer
Enjoying strong profit and growing by 20 per cent annually, Emirates Post has turned its focus on expansion plans abroad.
Abdulla Ibrahim Al Daboos, Vice-Chairman and President of Emirates Post Holding Group and Chairman of Emirates Post, sat down with Emirates Business to discuss the group’s diverse business interests and its plans for the future, including acquiring a fleet of aircraft and starting joint ventures with remittance firms overseas.
Looking beyond traditional domestic mail processing, Al Daboos is working to turn Emirates Post into a successful international brand.
How was Emirates Post’s performance last year and what are your expectations for 2008?
No doubt we have made a lot of progress since 2001 when Emirates Post was established as a commercial entity under the UAE Government. The services we have provided so far have been very helpful to the community. Emirates Post made Dh190 million net profit for the year 2007, and we expect a 20 per cent growth from our national operations. If we acquire international operations, we can expect another 20 per cent growth.
What measures has Emirates Post been taking to prepare to move outside the UAE?
We had to think of expansion to our operations and services beyond the UAE borders. We divided our strategy into three categories: financial, express and logistic services. We have already developed these, but more on the national level, and we can use this as our foundation to go regionally and internationally.
We are re-engineering a lot of the processes currently taking place in the government, semi-government and private sectors by evaluating how they conduct their businesses and interact with their customers and mail management. But we need to work on many issues such as proper management, proper IT infrastructure and liquidity so we can succeed internationally.
Can you elaborate on your international expansion strategy?
We do a lot of money remittance. There are a lot of people who transfer money to countries such as India, Pakistan, Indonesia, the Philippines, Egypt, Jordan and Lebanon. In the past, we used to have a relationship or an agreement with a company or agent in those countries.
We now intend to acquire a stake in such companies abroad to expand our services. This will apply to cargo and courier services. Instead of being just the sending part, we would like to have a share in the receiving part as well.
We expect this to give us better control over the services and a better share of the revenues on the other side of the business. Meanwhile, we are keeping in mind the continuous improvement of quality. If we are involved in the know how, then we will be sure the service level here and abroad is the same.
The more we expand internationally, the more we control and improve quality in these countries. Also it will mean we will bring the business here as individuals and corporates have more confidence in us. It is a new way of looking at it. This is how we can replicate the success of many of the services we provide here in certain countries where we can operate.
Have you already started acquiring stakes in companies abroad?
Yes, we have already have done this. We have begun due diligence in India, Pakistan and Indonesia – talking to a company that exists there and buying a share in that company. We are working now on Sudan, Jordan and Syria.
As Emirates Post Group, we have a lot of services and several companies beneath us such as: Electronic Data Centre (EDC), which is a document data centre that does printing, mail fulfilment and credit card issuance; Wall Street Exchange; and Emirates Marketing and Promotion.
We are trying to expand wherever we go to improve services that are related to what we do. Look what we have been doing nationally. This is encouraging us to set up joint ventures to expand internationally.
What are the challenges you foresee to your international expansion plans?
There are different types of challenges on this front. When it comes to system development and system operation, it is easy anywhere in the world. But the question is about two challenges you need to deal with – regulations and human resources.
As for regulations, they are about what is permissible, how government control in that particular country works and how open that country or market is. Certain countries are pretty open and they welcome investment. While in other countries, there has to be a stake, there has to be monitoring and there has to be a local partner.
With human resources, certain countries have abundant, easy to train, easy to modify resources, but in other countries, there is a severe shortage.
So sometimes the question or the challenge of the game has nothing to do with the system, has nothing to do with liquidity situation, but has to do more with regulations and human resources.
Are you planning to market Emirates Post as a brand?
It is good when we are recognised as a brand. That is why we examine opportunities as they come and we do not want to wait for this sort of opportunity to come and pass us. Emirates Post Group is a holding company.
If there is a window for an extra service, we are open to it. Not everybody does this. Certain countries, such as Indonesia, have one of the largest populations with a lot of good things, but a lot of problems. When it comes down to opportunities, whether in financial services, courier, cargo or printing, it is better to go as a group as against the individual.
Sudan is another example of a country and market that we are eyeing. Sudan needs many services. For other countries, maybe there are a lot of regulations when it comes to financial services, but there is an open door for courier services. Fine, so let’s pursue those.
Many people do not know that one of ourmain activities is financial services. Through history, it is the post office that has offered financial services. Only then did banks come into the picture, not vice versa. One of the main activities of any post office is to offer financial services.
We used to offer 12 different services across our counters. Today, we offer 50. There has been a major shift. The postal field brings everybody together.
What is your market share of the courier business in the UAE?
As far as normal mail, we are the only ones doing it. So, we have 100 per cent share. In the courier and express market, we have 60 per cent of the national market, even though we have 55 registered courier companies that compete with us.
A lot of these companies compete on the international market. We deliver more than 20,000 pieces nationally daily. For international deliveries, we have 15 per cent market share from out-going international operations.
How has Emirates Post gone about establishing its cargo and courier fleet? Where do things stand now?
Six months ago, we started an operation out of Al Ain Airport with Airbus to fly to and from Dhaka, Lahore, Amsterdam, Istanbul and Frankfurt. And we started a modest operation to see how the courier and cargo business would go. We want to control the mode of transport.
Our idea is not to get into the airline business, but we want to guarantee the mode of transportation. We have been in situations where we have major shipments, cargo and major operations where we use other commercial airlines.
Sometimes we had difficulties in sending and expanding our business because of the limited capacity that is available for us to put in these people’s aircraft. We had to get into this because of our clients and our expansion needs to control the mode of transport.
Our plan was to test that ground for the first six months to one year. By April, we will complete the one-year experimental period and that is when we will re-evaluate things and get a hold of liquidity. We envision that we will need 50 aircraft within the next five years to carry out courier and cargo business in the region. But we do not just want to go ahead and buy aircraft.
What factors will contribute to your decision to lease or buy aircraft in the future?
Fuel prices have gone up, so we have to review our calculations again. We have two aircraft with 40-tonne capacity each. We will check the current two aircraft we operate. Are they OK? Should we look for more fuel-efficient planes? Should we think of other alternatives? Empost is currently studying its next step for expanding its fleet to 50 aircraft over the next five years.
Where does Emirates Post stand now on its plans to make an initial public offering?
The proposal is currently with the government to decide what percentages will be floated in the market and what will be for sale. But due to the recent Cabinet changes, this may take some time. We are pursuing this to generate liquidity that supports our expansion and all parties involved are investing and excited about their investments.
Vice-Chairman and President of Emirates Post Holding Group
Daboos, who is also Chairman of Emirates Post, worked for a short period of time with Zadco, a petroleum company in Abu Dhabi, before joining Emirates airlines for 10 years, where he was the head of the local branch of the airlines association as well as the GCC airlines association.
Al Daboos joined Emirates Post in 1999 as director general and has led its transformation into a commercially driven postal corporation.
Under his leadership, Emirates Post embarked on an ambitious expansion and diversification plan.
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