Japan Post's FY 2006 mail service to post 1st loss in 4 years

Japan Post said Wednesday its mail service business is likely to fall into the red, with a net loss of 5.6 billion yen, in the current 2006 fiscal year for the first time in four years.

In fiscal 2005 that ended in March, the mail delivery business recorded a 99.1 percent plunge in net profit from the previous year to 200 million yen, Japan Post said.

The profit contraction is blamed in part on a drop in the amount of mail handled by post offices due to increased use of e-mail, according to analysts.

The public corporation, created in April 2003 to take over postal services from the government, anticipates the loss in the fiscal 2006 mail service as it will book expenses related to its privatization starting in October 2007.

In fiscal 2005, Japan Post registered 23.06 trillion yen in operating revenues, up 11.8 percent over the previous year.

Despite the profit plunge in the mail delivery business, Japan Post chalked up a net profit of 1.93 trillion yen from overall operations, up 56.0 percent over the previous year and larger than Toyota Motor Corp.’s group net profit of 1.37 trillion yen, the biggest among Japanese companies in the year.

The increase was led by the postal savings business which saw net profit climb 59.6 percent to 1.93 trillion yen, reflecting returns on the investment of savings in stocks.

The postal life insurance business, which is required to retain its net profit as internal reserves, added 931.8 billion yen to them in fiscal 2005, Japan Post said.