The government projected Wednesday that the four entities taking over Japan Post's services will be in the black in fiscal 2008, but, without new business, profits at three of the units will have declined by the time the privatization process is completed in fiscal 2016.

According to estimates released by postal reform minister Heizo Takenaka, only the postal insurance company is expected to be in the red in fiscal 2007, when the 10-year privatization process is to begin.

The other three entities will take over mail delivery, postal savings and post office network management.

The estimates are based on the assumption that the spinoffs do not start new businesses or pay corporate tax.

For the mail delivery entity, net profit is expected to reach 38.2 yen billon in fiscal 2007 before dropping to 10.4 billion yen in fiscal 2016, when mail volume is projected to fall.

For the post office network management unit, the government expects most of the revenues to consist of commissions from the remaining three Japan Post spinoffs. Its net profit in fiscal 2007 is estimated at 204 billion yen, which is forecast to shrink to 68.2 billion yen in fiscal 2016 from an expected fall in commissions.

The postal savings body would post a net profit of 228.9 billion yen in fiscal 2007, falling to 148.3 billion yen in fiscal 2016 on the assumption that interest rates will remain at the current levels and proceeds from postal savings will be invested mainly in government bonds.

The postal insurance unit is expected to report a 35.1 billion yen net loss in fiscal 2007 before swinging into the black the following fiscal year. It is forecast to post a net profit of 30.1 billion yen in fiscal 2016.

The government attributed the projected shrinkage in the three bodies' net profits to a reduction in mail delivery volume, a decline in postal savings and subsequent fall in proceeds from investment of those savings, and a drop in commissions paid to the network management body from the other two.

In compiling the projections, the government allocated 120,000 of the 271,000 Japan Post employees to the mail delivery company, 8,000 to the postal savings body, 4,000 to the postal insurance entity, 135,000 to the network management firm and 4,000 to the holding company of the four entities.