Japan Post expects FY 2006 profit on mail service instead of loss+

Japan Post said Wednesday its mail service will likely register a net profit of several billion yen for the year through March, up from the 27.9 billion yen loss projected last November.

The black-ink figure is expected to top the 2.6 billion yen profit booked in the preceding year, thanks to increased turnover of the parcel delivery service and cost reductions, the public postal corporation said.

The fiscal 2006 earnings results will be announced May 23 after data has been finalized, according to Japan Post.

The mail service posted a net loss of 71.4 billion yen in the six months through September, as regular mail traffic decreased while personnel and other costs rose.

The service typically sees strong revenue in the second half of a business year because of delivery of New Year cards.

But Japan Post disbursed considerable costs, including investment in computer networks in preparation for the postal system privatization due to start in October. This led the company last November to expect the mail service to plunge into the red.

However, parcel deliveries increased and privatization costs were curbed in the second half of the fiscal year, enabling Japan Post’s mail service to stay in the black for four years in a row since the establishment of the corporation.

The postal savings business is expected to have suffered a sharp profit fall in fiscal 2006 after it made a substantial profit in the previous year from equity investment.