“Stringent” cost-cutting sees Canada Post record profit
Canada Post Corporation tabled its 2009 annual report in Parliament, reporting a profit for the 15th consecutive year. The Corporation recorded consolidated net income of $281m on revenue of $7.3bn, and reported an operating margin of 4.9%.
The profit in 2009 does not truly reflect the underlying weakness in Canada Post Corporation’s operating performance and the financial challenges ahead, the company admitted. The company would have reported a loss in 2009 if it were not for stringent cost containment measures that resulted in a reduction of $540m of planned costs by the Canada Post segment, as well as an unplanned non-cash reduction of $271m in employee future benefits expense.
In 2009 Canada Post, like many other businesses, faced one of the worst economic climates in decades. Volumes and revenues in all three core Canada Post segment lines of business, as well as its largest subsidiary, Purolator Courier, fell sharply. Consolidated revenue declined by $421m from 2008 levels.
In spite of the challenges faced in 2009, the Corporation met or exceeded Delivery Service Performance targets for all products and registered a gain in its externally surveyed Customer Value Index score. The number of lost-time workplace accidents fell by 22% and the company reported its highest ever employee engagement score. In addition, the company’s $2-billion “Postal Transformation” modernisation programme hit key milestones in its development, leading up to the opening this June of a new, state-of-the-art mail processing plant in Winnipeg.
“Thanks to the tremendous commitment and effort by our employees and management team to reduce our operating costs, we were able to remain profitable in 2009 while maintaining our service to Canadians and improving safety for our people,” says Moya Greene, president and CEO. “It was certainly one of our most challenging years. Looking ahead, as mail volumes are predicted to decline further, cost containment measures will not be sufficient to sustain our company. We must continue to modernise and seek ways to grow our business.”
In September 2009, the Government of Canada announced the Canadian Postal Service Charter. The Charter outlines the expectations concerning Canada Post’s service. The 2009 annual report includes the first report on its performance against the Government’s expectations. The Corporation will continue to report each year on the Charter.
“The Board of Directors supports management’s Postal Transformation strategy, which is aimed at modernising operations on an unprecedented scale. The success achieved in 2009 gives me comfort that we are well positioned to face the future,” added Marc A. Courtois, chairman of Canada Post’s Board of Directors.
