Canada Post segment reports $151 million loss before tax in second quarter

Unique circumstances of COVID-19 shutdowns in 2020 affect year-over-year comparisons

OTTAWA, ON, Aug. 20, 2021 /CNW/ - Canada Post recorded a loss before tax of $151 million in the second quarter of 2021, an improvement of $227 million from the $378 million loss before tax in the same quarter a year earlier. Although significant, this improvement resulted mainly from the unique unfavourable effects of COVID-19 on the business and one-time charges in 2020. 

Revenue increased by $188 million, or 11.5 per cent, in the second quarter and by $464 million, or 12.2 per cent,¹ in the first six months of the year, compared to the same periods a year earlier. Continued Parcels revenue growth, increased Transaction Mail volumes linked to the 2021 Census and stronger Direct Marketing volumes helped drive this revenue growth. Year-over-year growth rates in each business line reflect the impact of COVID-19 in 2020, which included significant declines in Transaction Mail and Direct Marketing but also soaring parcel volumes. Two additional business days also contributed to the revenue increase for the six-month period in 2021.

Costs of operations decreased by $44 million, or 2.2 per cent, in the second quarter of 2021 and increased by $243 million, or 4.1 per cent, for the year-to-date of 2021, compared to the previous year. These results were largely due to a one-time charge from the arbitrator's decision in the second quarter of 2020 that provided new collective agreements with the Canadian Union of Postal Workers. Excluding the impact of the arbitrator's decision, costs of operations increased by $70 million in the second quarter and $357 million for the year-to-date compared to the same periods in 2020. These increases were driven by annual wage increases, processing and delivery costs related to higher parcel volumes, the required operational changes due to COVID-19, health and safety costs and expenses for special employee leave. The accelerated shift in our business from mail to parcels continues to put pressure on our capacity, processing and delivery costs.

Parcels
Despite a parcel volume decline in the second quarter of 5 million pieces, or 5.4 per cent, compared to the same period a year earlier, revenue grew by $52 million, or 6.1 per cent. Revenue results were positively affected by proactively managing use of available capacity through our commercial customer and product mix. Compared to a year earlier when online shopping surged, growth in the second quarter of 2021 began to reflect the return to in-person shopping. For the first six months of 2021, revenue increased by $338 million, or 20.2 per cent, as volumes increased by 18 million pieces, or 8.5 per cent, compared to the same period of the prior year.

Transaction Mail
The 2021 Census mailing contributed to revenue growth for the business line. Transaction Mail revenue increased by $43 million, or 7.5 per cent, in the second quarter as volumes increased by 25 million pieces, or 4.1 per cent, from the same period in the prior year. For the first two quarters of 2021, revenue grew by $33 million, or 0.9 per cent, as volumes fell by 4 million pieces, or 1.9 per cent, compared to the same period a year earlier. Transaction Mail revenue continues to erode as consumers and mailers migrate to digital alternatives. Due to the pandemic, Canada Post is maintaining its regulated stamp prices at 2020 levels through 2021, while minimizing the impact of other price changes.

Direct Marketing
Direct Marketing started to recover in the second quarter, following significant declines in Canada Post Personalized Mail™ and Canada Post Neighbourhood Mail™ in 2020 as customers postponed or cancelled marketing campaigns due to COVID-19. Direct Marketing revenue increased $72 million, or 49.1 per cent, for the second quarter as volumes increased by 375 million pieces, or 66.1 per cent, compared to the same period in the prior year. For the first two quarters of 2021, Direct Marketing revenue increased by $58 million, or 13.7 per cent, as volumes increased by 313 million pieces, or 19.0 per cent, compared to the same period a year earlier.

Group of Companies
The Canada Post Group of Companies² recorded a loss before tax of $64 million in the second quarter of 2021, marking a $269 million improvement from the $333 million loss before tax in the same period a year earlier. In the second quarter, Purolator and SCI's profits before tax of $77 million and $9 million, respectively, helped offset the Canada Post segment's loss before tax. Due to recurring factors, the Canada Post segment would have reported a second-quarter loss, regardless of COVID–19. For the first six months of the year, the Group of Companies recorded a loss before tax of $83 million, an improvement of $303 million from the same period in 2020, when the loss before tax was $386 million.

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.

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1.	All per cent values in this news release have been adjusted for differences in business and paid days and are calculated on values rounded to the nearest thousand. In the second quarter of 2021, there was no difference in business or paid days compared to the second quarter in 2020. For the year-to-date period of 2021, there were two additional business days and three additional paid days compared to the same period in 2020.
2.	The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.

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SOURCE Canada Post

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