Canada Post segment reports $160-million loss before tax for second quarter

Parcel volumes decline from elevated levels a year earlier

OTTAWA, ON, Aug. 26, 2022 /CNW/ - Canada Post recorded a loss before tax of $160 million in the second quarter of 2022 as Canadians' online shopping slowed and revenue declined for Parcels and Transaction Mail.

For the second quarter ended July 2, 2022, the Canada Post segment's loss widened from a loss before tax of $151 million in the same quarter of the prior year. Revenue fell by $98 million, or 3.9 per cent,¹ from a year earlier.

For the first half of 2022, the segment recorded a loss before tax of $289 million, compared to $228 million in the same period a year earlier. Revenue fell by $218 million, or 5.0 per cent, compared to the first half of 2021.

For both second quarter and first half of 2022, Parcels revenue declined as Canadians' online shopping slowed from elevated levels a year earlier. Transaction Mail volumes and revenue continued to erode. Direct Marketing continued to recover compared to the previous year, even as consumers and businesses pulled back on spending due to uncertainty about the economic outlook.

Cost of operations improved by $84 million, or 4.3 per cent, for the second quarter compared to the same period a year earlier. For the first half of 2022, costs improved by $161 million, or 3.3 per cent, from the prior year period. Cost decreases were largely driven by lower labour and employee benefits due to parcel volume declines, while transportation and facilities costs rose. Spending also increased to sustain Canada Post's network and increase capacity.

Parcels

For the second quarter of 2022, Parcels revenue declined by $79 million, or 7.3 per cent, while volumes fell by 27 million pieces, or 27.9 per cent, compared to the same quarter of the prior year. For the first six months of 2022, revenue fell by $171 million, or 8.5 per cent, as volumes declined by 50 million pieces, or 25.4 per cent, compared to the same period of the prior year. The declines were partially due to the gradual return to in-person shopping in 2022 and year-over-year comparisons to the second quarter of 2021, when volumes were higher than normal and many stores remained closed due to COVID-19.  Global economic factors in 2022 also impacted Parcels results. Consumer spending and demand for parcel delivery services softened, while global supply chain and air capacity issues continued to affect inbound volumes.

Transaction Mail

For the second quarter, Transaction Mail revenue fell by $28 million, or 2.9 per cent, as volumes declined by 59 million pieces, or 8.1 per cent, compared to the same quarter in the prior year. For the first two quarters of 2022, revenue declined by $64 million, or 4.0 per cent, as volumes fell by 124 million pieces, or 8.6 per cent, compared to the same period a year earlier, which included revenue from the 2021 Census mailing. Transaction Mail continued to erode as consumers and mailers migrate to digital alternatives. Due to COVID-19, the Corporation continued to maintain regulated stamp prices at 2020 levels, which was partially offset by commercial rate increases in January 2022.

Direct Marketing

For the second quarter, Direct Marketing revenue rose by $24 million, or 13.2 per cent, as volumes increased by 140 million pieces, or 16.7 per cent, compared to the same quarter of the prior year. For the first six months of 2022, revenue increased by $42 million, or 10.6 per cent, as volumes rose by 206 million pieces, or 12.3 per cent, compared to the same period a year earlier. Customers increased their marketing campaigns in the first and second quarters of 2022, compared to 2021 when COVID-19 restrictions had negatively affected the use of Direct Marketing products. Uncertainty about the economic outlook negatively affected customer spending on marketing in the second quarter, which is expected to continue through 2022.

Group of Companies

The Canada Post Group of Companies² recorded a loss before tax of $64 million in the second quarter of 2022, consistent with the same period a year earlier. In the second quarter, profit before tax for the Purolator segment ($91 million), and SCI ($4 million) partially offset the Canada Post segment's $160 million loss.

For the first six months of 2022, the Group of Companies recorded a loss before tax of $164 million, as Canada Post's $289 million loss during the period was partially offset by Purolator's and SCI's profits before tax of $119 million and $6 million, respectively.

Background

The Canada Post Group of Companies' operations are funded by revenue generated by the sale of its products and services, not taxpayer dollars.

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 2022, the Group of Companies had one less business day and no difference in paid days compared to the second quarter of 2021. In the first six months of 2022, there was one less business day and one less paid day compared to the same period in 2021. When comparing year-over-year results, fewer business days result in decreased revenue, while fewer paid days lower the cost of operations.
   
   
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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