New Zealand Post reports $110m net profit for second half of 2015

New Zealand Post Group has reported a net profit after taxation (NPAT) of $110m for the six months to 31 December 2015. This was a $10m increase on the prior comparative period, which New Zealand Post attributed to Kiwibank’s performance and proceeds from the sale of Australia-based subsidiary Converga.

Underlying NPAT (excluding the gain from the Converga sale and other one off effects) was $74m, down $12m on the interim result for the comparable period last year.

New Zealand Post Group Chief Executive Brian Roche said Kiwi Group Holdings, including Kiwibank, Kiwi Insurance and Kiwi Wealth, “is progressing well and despite a volatile market put in a good performance to lock in its excellent growth in the previous equivalent period”.

However, Roche added that the postal services business (mail and parcels) result, however, was “below expectation, and continues to give rise to concerns as to its ongoing financial performance”.

According to Roche: “The postal services business continues to be challenged by tough market conditions. During the last 12 months letter volume fell by about 60 million units and while we have significantly reduced costs we have not kept pace with the rate of decline.

“We will continue to make necessary changes so that the nationwide letters network runs sustainably, including pursuing further cost savings.

“On the other side of the equation, we need to do more to grow revenues to offset the $20-30m we are losing every year from lower letter volumes.

“We have made some progress in parcels in the last year but there’s a lot more we can do. A highlight was a 7% increase in parcel volumes during the pre-Christmas period (November and December) compared with the previous year.”

Looking ahead, Roche said that as well as further cost reduction, the focus on strategic investment, automation and improving customer services will continue.

Roche concluded: “We also need to get better and faster at supporting our front line teams to secure more parcels business.”