New Zealand Post after-tax profit up to 34.7 percent

New Zealand Post’s after-tax profit rose 34.7 per cent to USD36.5 million in its June year, from the previous 12 months, its biggest lift in 10 years.

NZ Post’s turnover also passed the USD1 billion mark for the first time, up USD74.4m to USD1.05b.

The result was achieved on the back of a turnaround in the express courier business and a strong performance from the international mail business. Kiwibank’s performance was also up on expectations.

Letter volumes fell 2.3percent, compared with a trend of about a 1percent decline a year in the last few years.

Negotiations over a key joint venture with German logistics company DHL appear to have hit a snag with an announcement delayed by six months to the end of this year.

DHL approached NZ Post at the end of last year with a proposal to buy a half stake in the state-owned postal service’s courier brands.

NZ Post owns the Courier Post, SkyRoad, Pace and Contract Logistics brands. It has a long-standing relationship with DHL’s parent, Deutsche Post, and uses DHL for international freight services.

Under the joint venture, NZ Post’s courier brands would be placed in a separate business that would be equally owned by both parties. A plan was taken to the NZ Post board in June.

“The decision-making process was a lengthy one,” NZ Post chief executive John Allen said yesterday. “We have to work through the varying requirements of each organisation to bring this to its conclusion.”

It was a key strategic alliance for NZ Post Group. In establishing the relationship it was essential to secure the group’s future growth.

“That means we have got to be absolutely confident both of the capabilities of the proposed partner, and of the cultural fit between the two organisations, because this is … a very long term relationship.”

The NZ Post board had approved the joint venture in principle, but had not considered a proposal or rejected an earlier one, Allen said.

The talks with DHL were not a precurser to a privatisation plan for NZ Post, he said. “We are not operating the business on that basis, we have no plans of that kind.”

The DHL partnership was about growing the express business as a New Zealand-owned business. State ownership was no impediment to the growth of the business, he said.

Meanwhile, NZ Post increased the price of sending a standard letter from 40c to 45c in April to offset rising costs.

Although a further increase was not being considered yet to offset lower volumes, it would not be another 12 years before the next rise, Allen said. On time delivery performance bounced back to 96.8percent from 95.6percent last year.

The lower letter volume was offset by growth in domestic parcel volumes of 8.2percent and airmail packets and parcels sent overseas of 10percent.

The urgent courier business Pace had 12percent volume growth and direct mail grew 13% at December.

Costs rose USD63.7m to USD986.4m largely because of the expansion of the retail network growth of Kiwibank and the purchase of Outsource Solutions Australia.

The Government received a USD21.9m dividend, up 35.2percent.

Allen said the planned expansion of Kiwibank into small business banking would not require further taxpayer funding. The USD10m to USD20m estimated to be needed in the next two years would be funded from NZ Post’s balance sheet, he said.

Kiwibank will unveil its automatic teller machine network today.