Quakes prompt "very disappointing" loss for New Zealand Post
Damage and disruption from this year’s earthquakes have compounded with a bad economy and company restructuring to push New Zealand Post $35.6m into the red. Issuing its preliminary results today for the 12 months up to the end of June, 2011, New Zealand Post said major earthquakes in the Canterbury/Christchurch area in September 2010, February and June 2011 cost it $29.1m.
Other factors that saw the Group turning a small profit in 2010 into its loss included a $35m write-down as it withdrew from Parcel Direct Group, its Australian joint venture with DHL, as well as $12.3m in restructuring costs from a “major alignment” of the business to respond to current and future market trends.
Ongoing depressed economic conditions did not help matters, but further financial pressure has come from New Zealand Post’s $67m increase in its bad debt provisioning for its Kiwibank unit in response to the poor economy and Christchurch earthquakes.
The group’s overall revenue grew 6.2% year-on-year to $1.27bn, but operating costs grew faster, by 11% to $1.3bn.
The Group’s $35.6m loss turned around a net profit after tax (NPAT) of $1.3m seen last year.
Group Chief Executive Brian Roche said: “While the result is very disappointing, the Group is confident of a return to a positive NPAT in the coming financial year.”
Despite the challenging conditions, Roche went on to say that traditional postal services had been performing adequately, though there was “need for significant change” in the way the business is operated in order to safeguard long-term stability.
“We have made substantial progress in implementing some of those changes and will continue the process in the coming year,” he said.
A new plan to cope with “ongoing and inevitable” declines in mail volumes will be put before the New Zealand Post board this financial year, the Group CEO said.
Work is also ongoing in building New Zealand Post’s digital services – the company has an agreement to use Zumbox digital mail systems – and the Group is also building its Kiwibank financial services.
“Work will also continue towards transformation of the store network to ensure economic viability. These changes will improve access to and convenience of services for customers utilising technology while continuing to provide a valued community presence,” added Roche.