USPS posts net loss of $8.5bn
USPS has reported a net loss of $8.5bn for 2010, for the fiscal year ending 30 September. This represents a further loss of $4.7bn on top of the 2009’s net loss of $3.8bn.
Excluding charges to income primarily resulting from changes to interest rates that impact the organisation’s workers’ compensation liability, the net loss was $6bn, the company said.
An operating revenue of $67.1bn was recorded, which amounted to a year-on-year drop of $1bn. The organisation’s operating expenses stood at approximately $70bn (excluding a $5.5bn expense for pre-funding Retiree Health Benefits), down from approximately $70.4bn in 2009 (excluding a $1.4 billion expense for RHB).
USPS said the negative result was due to revenue decline and additional expenses in 2010 associated with RHB pre-funding and workers’ compensation.
A company statement said: “The recent recession, continuing economic pressures and migration of mail to electronic media had a significant adverse impact on mail volumes and operating revenues. Despite rigorous initiatives that eliminated 75m work hours and drove productivity to record highs in 2010, the losses mounted.”
Commenting on the results, chief financial officer, Joe Corbett, said: “Over the last two years, the Postal Service realised more than $9bn in cost savings, primarily by eliminating about 105,000 full-time equivalent positions – more than any other organisation, anywhere.
“We will continue our relentless efforts to innovate and improve efficiency. However, the need for changes to legislation, regulations and labour contracts has never been more obvious.”
Total mail volume in the United States stood at 170.6bn pieces, compared to 176.7bn pieces in 2009, a decline of 3.5%.
First-Class Mail volume continues to decline, with year-over-year declines of 6.6% in 2010, 8.6% in 2009, and 4.8% in 2008. This trend is particularly disturbing as First-Class Mail, the most profitable product, generates more than half of total revenue. Volume for Standard Mail showed improvement during the year, reflecting some signs of economic recovery in late 2010, but, in total, was flat in 2010, compared to 2009.
In its report on the financial statements contained in the Postal Service’s 2010 report, independent auditor Ernst & Young is expected to issue an unqualified audit opinion that will emphasise that questions remain about the ability of the Postal Service to generate sufficient liquidity to make all of its future payments, including the $5.5bn RHB pre-funding payment due on the last day of fiscal year 2011.
