Canada Post segment reports $13-million loss before tax in the third quarter

Parcels revenue benefited from an e-commerce back-to-school lift

OTTAWA, Nov. 20, 2015 /CNW/ - Continued growth in the Parcels business helped ease the impact of falling Transaction Mail volumes and higher employee benefit expenses as the Canada Post segment reported a loss before tax of $13 million in the third quarter, ended October 3, 2015.

While Parcels volumes are usually slow in the third quarter, there was no summer lull in 2015. Third-quarter Domestic Parcels volumes were 16.1 per cent¹ higher than a year ago. The results reflect the growing success of Canada Post's e-commerce strategy and the positive impact of its innovative solutions for online retailers and shoppers.

The third-quarter loss before tax of $13 million compares to a profit before tax of $13 million in the third quarter of 2014. In the first three quarters of 2015, the Canada Post segment reported a loss before tax of $20 million compared to a profit before tax of $39 million in the same period a year ago.

Transaction Mail volumes continued to fall, but less than in previous quarters because of the volume attributed to the federal election. Without these additional mailings, Transaction Mail volumes would have fallen by 5.5 per cent¹ in the third quarter of 2015 compared to the same period in 2014. Election mailings also helped boost Direct Marketing volumes and revenue.

As expected, the volatility of employee benefit expenses continues to present a sizeable financial risk. Employee benefit expenses for the Canada Post segment rose by $44 million in the quarter and by $173 million in the first three quarters of 2015 compared to the same periods a year ago. This resulted from a decrease in the discount rate used to calculate benefit plan costs in 2015, and was partially offset by strong pension returns in 2014.

Transaction Mail results

In the third quarter, Transaction Mail revenue fell by $9 million to $742 million. Federal election mailings reduced the decline in Transaction Mail volumes (letters, bills and statements) to 9 million pieces or 2.6 per cent.¹ In the first three quarters of 2015, Transaction Mail revenue increased by $59 million or 0.4 per cent¹ as result of new pricing that took effect March 31, 2014. Volumes in the first three quarters fell by 111 million pieces or 5.8 per cent.¹ The Transaction Mail results discussed above compare to results in the same periods of 2014.

Parcels results

Third-quarter Parcels revenue for the Canada Post segment rose by $43 million or 11.3 per cent¹ to $380 million, while volumes rose by over four million pieces or 10.4 per cent¹ compared to the same period a year ago. Revenue for Domestic Parcels, the largest product category, grew in the third quarter by $36 million or 13.2 per cent¹ compared to a year ago. In the first three quarters of 2015, Parcels revenue for the Canada Post segment increased by $99 million or 7.4 per cent¹ and volumes increased by 11 million pieces or 7.8 per cent¹ compared to the same period a year ago.

Direct Marketing results

Direct Marketing revenue increased by $14 million or 3.5 per cent¹ to $294 million in the third quarter while volumes increased by 81 million pieces or 5.6 per cent¹ compared to the same period a year ago. In the first three quarters, revenue fell by 0.6 per cent¹ and volume increased by 0.9 per cent¹ compared to the same period a year ago.

Group of Companies

In the third quarter, the Canada Post Group of Companies² reported a profit before tax of $10 million compared to a profit before tax of $35 million in the same period a year ago. For the first three quarters, the Group of Companies reported a profit before tax of $28 million compared to a profit before tax of $84 million in the first three quarters of 2014.

To read the full report in PDF, visit canadapost.ca/aboutus and select "Financial Reports" from the Corporate menu.

Background

The operations of the Canada Post Group of Companies are funded by the revenue generated by the sale of its products and services, not taxpayer dollars. Canada Post has a mandate from the Government of Canada to remain financially self-sufficient and to provide a standard of postal service that is affordable and meets the needs of the people of Canada.

1. Variance percentages of revenue, cost of operations and volume were adjusted to reflect the impact of four additional business (trading) days and four additional paid days in the first three quarters of 2015, compared to the first three quarters of 2014.
2. The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned principal subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.

SOURCE Canada Post

Media Relations, 613 734-8888, [email protected]