Strikes, lockout turn Canada Post profits into losses in Q2
June’s strikes and the national lockout at Canada Post cost the Corporation $167m, according to its the latest financial results, out today. Canada Post lost $35m in the three months up to July 2, a reversal of the $35m profit made in the same period in 2010. Revenue was down 6% year-on-year to $1.34bn, although operating costs were down 3.5%, largely due to the lockout.
Reporting its second quarter results, Canada Post said overall postal revenues were was volumes were down across the board, mainly as a result of the work disruption in June, which came as talks broke down over a new long-term labour contract.
Transactional mail volumes in the quarter were down 6% year-on-year, driven by a 5.8% decline in lettermail, with $754m in revenues a 2.3% drop from Q2, 2010.
Parcel volumes fell 14.6%, pushing revenues down 17.5% to $247m, while direct mail volumes fell 12.2% and revenue 6.5% to $306m, particularly as mailers forced to find other options for their packages and marketing.
In the first half of 2011, Canada Post lost $13m – a $70m decline from the $57m profit made in the first six months of 2010.
Other activities in the Canada Post Corporation group, including the logistics segment and majority-owned courier subsidiary Purolator, meant the Group as a whole lost $17m during the second quarter of 2011, with the highlight being Purolator’s $24m profit, up 1% on the same period in 2010.
The Group struggled to a $3m profit for the six months up to July 2, 2011, though that was a 96% drop in profit compared to the $71m made in last year’s first half.
The Group as a whole brought in $1.76bn in revenue in the second quarter, compared to $1.83bn this time last year.
Along with the serious hit from the disruption caused by Canada Post’s conflict with the Canadian Union of Postal Workers, the Corporation’s pension plan is continuing to cause a major headache.
The Canada Post segment paid $214m extra into the plan in the first six months of 2011 as part of attempts to address the plan’s $3bn deficit – on top of $150m regular contribution.
State-owned Canada Post has about 69,000 employees handling about 10.6bn pieces of mail and packages each year, serving more than 15m addresses across Canada along with 6,500 post offices.
Some 45,000 staff in urban areas are represented by CUPW, which began 12 days of rotating strike action in early June that turned into a nationwide suspension of services that ultimately required government legislation to restart services at the end of the month. A government-appointed arbitrator is yet to finalise the details of the next CUPW urban unit contract.
Commenting on its latest results, Canada Post’s management said it was still assessing the long-term impact of the labour disruption, though estimates on the impact in June have been made as $167m.
“The loss of revenue and the outcome of the legislated arbitration process will play a significant role in our ability to meet the profit targets included in our 2011 plan and beyond,” said the management statement.
Canada Post reported on its 2010 financial results last week, with profitability maintained despite a 2% drop in mail volumes and 27% drop in core business earnings compared to 2009.