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Postal service to report big profit this year

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Vincent

With its privatization defined as priority by economic officials, Empresa Brasileira de Correios e Telégrafos, the Brazilian Postal Service, is poised to have its best result in at least eight years.

Preliminary results for the first nine months show a profit of R$836.5 million, according to internal data to which Valor had access. The fourth quarter, when Correios traditionally has a leap in revenue because of shipping of Black Friday and Christmas orders, is likely to push that amount above R$1 billion.

"Everything points to that. We've had years in which the result was negative until September, and when you add the last quarter performance you post a profit of dozens or hundreds of millions of reais," says the vice president of the Association of Correios Professionals (Adcap), Marcos César Silva, who had a seat on the board of the company for five years.

In 2012, the profit was R$1.1 billion. Then Correios had four straight years of losses. It only returned to the black in 2017, but thanks to a last-minute accounting change. That year, the operating loss was close to R$2 billion. What happened was a change in the actuarial assumptions of the item known as "post-employment benefit," with a merely accounting expenses reduction because of changes in the health plan of employees. Even without reflecting balance between revenues and expenses, Correios posted a R$667 million profit.

The partial result of 2020, for the first three quarters, already eliminates most of the losses the company had with the 35-day strike of its employees. The strike ended on September 22.

Almost half of its current revenues come from express shipping. The company commands 44% of the Brazilian market, already open to competition in this segment, and the covid-19 pandemic caused a boom in online sales. The Brazilian Electronic Commerce Association projects 30% growth this year.

Mr. Silva, the former board director, says the prospect of a billion-real-plus profit this year shows that Correios has capacity to tackle the modernization challenge and weakens the...

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