Canada Post Q1: operating expenses increased by $287 million, compared to 2020
Canada Post recorded a loss before tax of $77 million in the first quarter of 2021, as higher operating costs and revenue declines in Transaction Mail and Direct Marketing exceeded the significant growth in Parcels revenue.
COVID-19 continued to have a significant impact on the postal service in the first quarter while we provided an essential service and kept employees safe. Canada Post’s operating expenses increased by $287 million in the quarter, compared to 2020, due to higher costs. These costs included special leaves for employees during COVID-19 to enable child and elder care, additional health and safety supplies, increased overtime expenses, wage increases, and additional collection, processing and delivery costs from growing parcel volumes. An additional three paid days during the first quarter of 2021, which ended April 3, also contributed to the higher costs.
Year-over-year comparisons are affected by the fact the Corporation only began to see impacts from COVID-19 to its costs, revenue and volumes toward the end of the first quarter last year. In the first quarter of 2021, revenue for the Canada Post segment increased by $276 million or 12.8 per cent compared to the same period in 2020.
Canada Post’s Parcels business continued to grow strongly in the first quarter of 2021 as Canadians continued to shop more online during the pandemic, part of a sustained shift to e-commerce. Declines in Transaction Mail and Direct Marketing during the quarter were due to businesses cancelling or delaying mailings in response to COVID-19 restrictions combined with the ongoing shift to digital alternatives. However, the growth in Parcels revenue more than offset declines in Transaction Mail and Direct Marketing revenue.
Parcels results
Parcels revenue and volumes increased significantly in the first quarter of 2021 compared to last year, as consumers continued shopping online more due to in-store restrictions during COVID-19. Total Parcels revenue increased by $286 million or 38.4 per cent in the first quarter,1 compared to the same period last year, while total volumes increased by 23 million pieces or 27.3 per cent.
Transaction Mail results
Transaction Mail is mostly letters, bills and statements. Ongoing revenue and volume declines continued in the first quarter of 2021, driven in part by COVID-19. Businesses are increasingly using electronic communication and converting their customers to digital alternatives. Transaction Mail volumes fell by 29 million pieces or 6.9 per cent in the first quarter and revenue fell by $10 million or 4.4 per cent, compared to the same quarter last year. Due to COVID-19, Canada Post decided to maintain stamp prices at 2020 levels through 2021 and minimize the impact of other price changes.
Direct Marketing results
Customers continued to delay or cancel marketing campaigns during the quarter due to the pandemic, adding to the impact of an ongoing move to digital channels. Direct Marketing revenue declined by $14 million or 8.8 per cent in the first quarter and volumes fell by 62 million pieces or 9.7 per cent, compared to the same quarter last year.
Group of Companies results
The Canada Post Group of Companies reported a loss before tax of $19 million in the first quarter of 2021, compared to a loss before tax of $53 million for the same quarter last year. The Group of Companies’ loss in the first quarter was due to the loss in the Canada Post segment. The Purolator segment recorded a profit before tax of $51 million in the first quarter of 2021, an increase of $41 million compared to the same period last year.
