Canada Post turns $129m loss into $13m profit

Canada Post Corporation reported a pre-tax profit for the 3rd quarter of $13 million, versus a $129 million loss in Q3 2013, the state-run postal operator announced on Wednesday.

As occurred in the second quarter, the positive results were mostly driven by lower employee benefit costs, parcels business growth, and new pricing measures for Transaction Mail, which all form part of Canada Post’s Five-point Action Plan.

So far this year, Canada Post has recorded a pre-tax profit of $39 million, compared to a $165 million loss for the equivalent period last year. The corporation expects to report a profit for 2014.

Transaction Mail volumes, however, continued to decline as Canadians continued opting for digital alternatives. Transaction Mail is Canada Posts core business.

Volumes declined more rapidly in the third quarter, after falling faster than expected in Q2. Compared to 2013, volumes fell by 58 million items or -6.1% in Q3 and by 175 million items or -5.1% in the first three quarters of 2014.

Source: “2014 Third Quarter Financial Report,” Canada Post Corporation.

In the third quarter, employee benefit costs declined by $48 million, and by $161 million for the first nine months of this year, compared to the equivalent periods last year.

Canada Post said in a statement:

“The Five-point Action Plan, announced in December 2013, is realigning the postal service with Canadians’ changing needs and will return it to financial self-sufficiency. To date, approximately 800,000 households have either been converted from delivery at the door to community mailbox delivery or are in various stages of the conversion process for 2015.”

“In addition, a strong focus on consolidating processing operations in light of the declines in mail volumes is delivering savings.”

Canada Post Group of Companies

The Canada Post Group of Companies* posted a pre-tax profit of $35 million in Q3 2014, versus a $109 million loss in Q3 2013, and a pre-tax profit of $84 million for the first three quarters of 2014, compared to a $134 million loss for Q1, Q2 & Q3 of 2013.

* The Canada Post Group of Companies comprises the core Canada Post segment and its three non-wholly owned principal subsidiaries, Innovapost Inc., Purolator Holdings Ltd., SCI Group Inc.

Parcels revenue increased by 8.2% to $337 million in Q3 2014 compared to the second quarter, and by 8.1% versus Q3 2013. Parcels revenue for the first nine months of this year grew by 8.9% to over $1 billion, with volumes rising by 4 million pieces or 4.2% compared to the equivalent period last year.

Transaction Mail volumes grew by 13.7% to $750 million in Q3 2014 versus Q3 2013. This was mainly due to the Lettermail price adjustment that came into effect in the second quarter. For the first three quarters, revenue was 6.5% up on the same period last year.

Direct Marketing volumes in the third quarter fell by 65 million items or -5.6%, while revenue was $15 million down at $279 million, compared to Q3 2013. Revenue for the first three quarters declined by -3.1% or $32 million to $874 million, while volumes were -2.2% down versus the same period in 2013.