Correios accumulate billions of dollars in losses and account for half of the state-owned company’s deficit

The Brazilian Post and Telegraph Company is going through a financial moment classified as “very serious”. Recent data indicate that the company became responsible for more than half of the combined losses of all Brazilian companies. Last year alone, the deficit recorded was R$2.5 billion.

According to an analysis by economist Alan Ghani, from Young Panthe current situation contrasts with the company’s recent performance. Between 2017 and 2021, they were a profitable company. However, the scenario reversed from 2022 onwards, starting a sequence of negative results that should extend into 2024 and 2025, with projections of new billion-dollar losses.

The causes of the damage

To understand the crisis, it is necessary to divide the problems into two main axes: circumstantial factors and structural factors.

1. Circumstantial factors (financial and political)
These elements directly impact the company’s cash flow in the short term:

• Judicial debts: The payment of court orders has significantly burdened the budget.
• Payroll cost: The granting of salary adjustments above inflation increased the state-owned company’s fixed costs, unbalancing the accounts.
• Impact of taxation (“Blouse Tax”): The implementation of the 20% tax on international purchases of up to 50 dollars changed consumer behavior. With the increase in the cost of imports, there was a reduction in the volume of parcels transported by the Post Office. This scenario favored private competitors, such as Amazon and Mercado Livre, which absorbed part of the logistics demand.

2. Structural Factors (Business Model)
These elements refer to the company’s ability to remain relevant over time:

• Behavior change: The obsolescence of traditional services, such as sending letters and telegrams — massively replaced by e-mails and instant messages — has reduced one of the company’s original sources of revenue.
• Lack of adaptation: Unlike private logistics companies, which modernized quickly to meet the e-commerceCorreios faces difficulties in competing in agility and efficiency in the new digital scenario.

The direct consequence of the deficit is the transfer of the account to public coffers. Being a state-owned company, the billion-dollar loss ends up being covered, ultimately, by the Brazilian population. Given the company’s difficulty in reversing the situation and competing with the private sector, economic analysts are once again debating the need for privatization as a possible solution to stop the drain on public resources.

The negative performance spilled over into the Union Budget. The federal government initially predicted a deficit of R$6 billion for federal state-owned companies in 2025. However, due to the worsening of the crisis at the postal company, this forecast was revised to R$9 billion. To comply with current fiscal rules, which require compensation when the loss of state-owned companies exceeds the target, the federal government was forced to carry out a contingency (block) of R$3 billion in expenses from various ministries.

Faced with the unsustainable scenario, Correios announced a restructuring plan to try to stop the financial bleeding and guarantee the continuity of services. Key measures include:

• Voluntary Dismissal (PDV): The goal is to reduce the number of employees by 10 thousand people (currently 83 thousand).
• Sale of Assets: It is planned to sell around a thousand agencies considered to be in deficit and to sell properties, with the expectation of raising R$1.5 billion.
• New Features: The company seeks to raise R$20 billion in loans.
• Partnerships: The plan foresees the possibility of mergers, acquisitions and strategic partnerships with the private sector.

The state-owned company’s management states that the objective of the measures is to ensure financial sustainability and modernize logistics operations across the country.

*Report produced with the help of AI