MaltaPost said today that it is in talks with the regulator after suffering an increase in costs abroad.

In a statement to explain a drop in its profits in the first six months of its financial year, the company said the challenges brought about by industry-specific conditions impacted its general operating environment.

It said it was faced with a considerable increase in direct mail costs due to changes in tariffs regulated by the Universal Postal Union. This change in the tariff structure, as regulated by the UPU, also adversely impacted the company’s revenue streams.

"MaltaPost, being the national regulated postal operator, is mindful of its obligations to provide an affordable universal service albeit extending some of its core services at a loss in the short term as local letter tariffs continue to be the lowest in the EU. The company is working closely with its regulator, the Malta Communications Authority, to ensure a fair regulatory approach which is appropriate and relevant to the challenging and dynamic competitive market in which it operates," the company said.

In the six months ended March 31, MaltaPost reported a profit before tax of €796,000 compared to €1.69 million for the corresponding period last year.

During the period, the company concluded acquisitions of key properties, including its head office in Marsa and other strategically located properties. These were financed by a blend of own funds and bank borrowings which impacted the interim results through a decrease in net finance income and an increase in depreciation and amortisation charges.

MaltaPost said that during the six months, turnover rose by 3.1% to €11.0 million (2011: €10.7 million). Traditional mail volumes continued to decline, in line with worldwide trend. However, this was compensated by an increase in weight of cross-border traffic which registered an increase in revenue despite being negatively impacted by the change in tariff structure as determined by the UPU. Other non postal revenue also contributed positively to the increase in turnover.

Other expenses increased by 22.6% principally as a result of the increased mail costs explained above and labour cost; Total assets increased by 7.9% to €29.6 million; Shareholders’ funds increased by 1.4% to €14.7 million.