Vyacheslav Klimov, "Nova Poshta": Business pressure is altering formats but is far from stopping.
In an effort to connect Ukrainians abroad with those in Ukraine, "Nova Poshta" has opened over a hundred branches in the European Union and is already planning to expand to new continents. This can confidently be described as the largest expansion by a Ukrainian business during the period of the great war or even throughout all the years of independence.
The company, which has focused solely on delivery since 2001, has established its own financial company, energy division, and even airlines in the last three years. By Western standards, it is a true corporation.
Despite the scale of operations, Klymov is well aware of what is happening in various divisions of the business. He easily recalls the locations of shelters in different cities and when they were opened. He expresses frustration that foreign specialists cannot come to Ukraine to install their equipment at "Nova Poshta" terminals, forcing them to rely on video communication. He also excitedly shares details about the "trophy" aircraft of his airline.
At the beginning of 2024, Klymov joined the Council of Entrepreneurs under the President, which was established in response to the "Mazepa case". However, he has only met with Zelensky once since then.
Why does "Nova Poshta" not perceive competition from the "main postal service of the country," how is the pressure on business changing, who does he communicate with in the President's Office, and when will branches appear in the USA?
On War Losses, Delivery Speed Increases, Weapons, and Drugs
— "Nova Poshta" has repeatedly become a target for Russians. How many branches and other infrastructure facilities have you lost during this time?
— The estimated loss for "Nova Poshta" is around 2.8 billion hryvnias. We have lost about three hundred of our branches, and ten terminals have been hit or completely destroyed due to terrorist attacks. Two terminals in Dnipro and Poltava are beyond recovery.
There have been several horrific tragedies. The largest occurred in October 2023 when the Kharkiv Innovation Terminal was attacked, resulting in the deaths of eight of our colleagues. Over a thousand branches are located in occupied territories, and we have no idea what is happening there.
— Despite such losses, you continue to invest in the company's development. Have you attracted external funding, not necessarily from abroad? What does your credit portfolio look like?
— We attract credit funds and issue corporate bonds. We try to finance the main part of our investment portfolio from our own resources. When we do go to the borrowing market or approach banks, we aim to do so purposefully, for example, for building a logistics facility.
3 — Can you disclose the size of your credit portfolio?
— I cannot provide a specific figure as I do not have it, but we strive to be very conservative so that the credit portfolio does not exceed one year's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization – EP).
— How are the financial affairs of "Nova Poshta" in 2024? What profit do you expect?
— We are following our financial plan. At the moment, I cannot disclose projected figures regarding finances. The growth in the number of parcels over nine months is about 16% year-on-year. In hryvnias, this translates to approximately 19% growth.
— You have invested in distribution centers. How much has delivery speed increased since 2022?
— Approximately by one hour. Before the war, a package typically took about 25 hours to reach the recipient within Ukraine, and now it takes about 24 hours. This is significant over long distances. During the war, we have become much faster.
— Increasing speed also comes with risks. Previously, stories about the shipment of weapons, drugs, and other prohibited items were often heard. How can these cases be detected in a fast process?
— Security is a key issue for us. First: in the entire frontline zone, packages are accepted only in open form. We learned this back in 2014. Now we monitor everything that is sent from frontline territories. Second: there is a vast video surveillance system. All processes in branches and terminals are recorded, and we see everything.
There are many security measures in place. I can confidently say that "Nova Poshta" is practically not used for such prohibited shipments because we actively work in this area.
— Nevertheless, there are many such cases in the court register. How many such cases have been detected during the great war?
— I do not have that information, but I am sure that such cases number in the dozens or hundreds of shipments. We are actively cooperating with law enforcement.
— How can "Nova Poshta" detect drugs? Weapons can be shipped even in non-frontline regions. Do you have a verification stage where there are, conditionally, frames like at the airport?
— First of all, such frames indeed exist at our facilities related to international shipments. Secondly, we have a special department that constantly analyzes various shipments and different customer groups to identify risky shipments and risky clients.
We cannot and do not want to worsen the lives of millions of consumers for the sake of security, but through such analysis, we can see certain behavioral patterns of our clients or specific shipments that may pose risks.
From time to time, dogs trained to detect drugs appear at terminals. Believe me, this works. People who try to use us for such operations are aware of this and try to stay away.
On "Ukrposhta," Marketplace Creation, and Banking Services
— The slogan of "Ukrposhta" is "The Main Postal Service of the Country." What do you think about this?
— I think it is an advertising slogan.
— And what are your thoughts on it?
— If we talk about the national operator as a competitor, I would say that we do not notice them, especially within Ukraine. They are indeed a leader in international shipments due to the integration of all national postal services, facilitating a vast number of goods reaching here through the national operator.
Regarding the shipment of packages within the country, I believe we won that competitive battle long ago, and in my opinion, the gap continues to widen.
— Until 2022, there was a trend towards privatization. The issue of privatizing part of "Ukrposhta" has always been on the agenda. If part of "Ukrposhta" were put up for sale, would you consider investing?
— All state companies should be privatized. The state is an extremely inefficient owner. Moreover, privatization should not be for profit, but as the great Bendukidze taught us (Kakha Bendukidze, Georgian politician and entrepreneur – EP), to get rid of it for 1 dollar. By the way, I really hope that after Donald Trump's victory in the USA, the trend of radically reducing the role of the state in the economy will come back into fashion.
Will we be participants in such privatization of "Ukrposhta"? I think not.
— Why?
— In our strategy, we do not engage in M&A (Mergers and Acquisitions – the process of absorbing other companies or merging). Our strategy is to grow businesses ourselves. M&A is complex: