Canada Post segment reports first-quarter profit before tax of $44 million as parcel business grows

Mail volumes and revenue continue to decline

OTTAWA, May 27, 2016 /CNW/ - Continuing strength in the Parcels line of business contributed to a $44-million profit before tax for the Canada Post segment in the first quarter of 2016. This compares to a profit before tax of $24 million in the same period a year ago.

First-quarter Parcels revenue for the Canada Post segment climbed 12.5 per cent¹ and volumes grew 14.4 per cent¹ over the same period a year ago. As an example of the growth, Canada Post delivered one million or more parcels on every Monday in January as Canadians shop online more often. By providing Canadians with reliable, convenient delivery and working closely with retailers of all sizes, the Canada Post segment became the country's No. 1 parcel company in 2015.

Transaction Mail continued to decline in the first quarter, ended April 2, 2016. Revenue fell by $40 million as volumes of letters, bills and statements dropped by 83 million pieces, compared to the same period a year ago. Since the beginning of 2015, mail volumes have fallen by nearly one third of a billion pieces.

Though both parcels and direct marketing represent opportunity for Canada Post, their growth will not be enough to offset the decline in the core Lettermail business and pay for the pension, or allow the Corporation to invest in its network and customer service. Therefore, this growth will not be enough to ensure Canada Post's long-term financial self-sustainability.

Employee benefit expenses for the Canada Post segment fell by $19 million from a year ago due to a slight increase in discount rates used to calculate benefit plan costs in 2016, as well as positive pension asset returns in 2015. Employee benefit costs, including pension, continue to be volatile and remain a significant challenge.

Parcels results

Parcels volumes for the Canada Post segment increased by more than 5 million pieces while revenue rose by $41 million to $421 million, compared to the same period a year ago. Volumes in Domestic Parcels, the largest product line, increased by 20.5 per cent¹ or more than 5 million pieces while revenue increased by 17.4 per cent¹ or $40 million.

Transaction Mail results

Transaction Mail volumes for the Canada Post segment declined 6.6 per cent¹ from a year ago and revenue fell three per cent¹ to $849 million. Since the peak year of 2006 though 2015 mail volumes have fallen by 32 per cent or 1.6 billion pieces.

Direct Marketing results

Direct Marketing volumes fell by 2.6 per cent¹ or 50 million pieces while revenue decreased by $15 million or 3.5 per cent¹ to $286 million for the Canada Post segment, compared to the same period a year ago.

Canada Post Group of Companies

The Canada Post Group of Companies² reported a profit before tax of $35 million compared to profit before tax of $22 million in the same period of 2015. Purolator reported a loss before tax of $12 million compared to a loss before tax of $6 million in the same period a year ago due to a reduction in volumes.

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.

Variance percentages of revenue and volumes were adjusted to reflect the impact of one less business day in the first quarter of 2016, compared to the first quarter of 2015. 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.

SOURCE Canada Post

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