Banking gains swell New Zealand Post profits, ahead of mail service cuts

New Zealand Post has seen its profits soar 40% in the first half of its fiscal year, thanks to its banking business and the sale of its Australian courier firm. The state-owned postal operator issued latest results this week showing revenue up 2% in the six months up to the end of December, to NZ$ 879m.

Net profit after tax grew 40% to NZ$100m.

The company said that its underlying profit growth was 18%, up to NZ$84m.

More than two thirds of the profits (NZ $71m) came from New Zealand Post’s Kiwibank business, which saw its profits up 36% year-on-year.

The company said growth in profits from the rest of the business came from cost-cutting and the parcels business.

Group chief executive Brian Roche said the company was moving in the right direction, now in its second year of a five-year transformation plan.

Letters decline

He said New Zealand Post was carrying more parcels than ever before, thanks to e-commerce, offsetting the decline of the traditional letters business.

Letter volumes were down 36m items (9.8%) compared with the same period up to December 2013. New Zealand Post is in the process of moving to an alternate day delivery schedule to cut its operating costs further in the light of the ongoing decline in letters volumes.

The company is also looking to move to a retail model where local retail businesses host post office counters or kiosks, instead of New Zealand Post itself owning the post office.

Kiwibank’s performance for the six months was strong, driven by improved net interest margin and cost containment, Roche said.

New Zealand Post sold its Australian small parcels delivery business CouriersPlease to Singapore Post back in December for A$95m.