Core postal segment of Canada Post reports $13m loss
The core postal segment of Canada Post has reported a $13m loss before tax in the third quarter (Q3). In a statement issued today (20 November), the company said that continued growth in the Parcels business helped ease the impact of falling Transaction Mail volumes and higher employee benefit expenses.
The $13m loss related specifically to “the Canada Post segment” – which is the postal division of Canada Post. The Canada Post group also includes the subsidiaries Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.
“While Parcels volumes are usually slow in the third quarter, there was no summer lull in 2015. Third-quarter Domestic Parcels volumes were 16.1% higher than a year ago. The results reflect the growing success of Canada Post’s e-commerce strategy and the positive impact of its innovative solutions for online retailers and shoppers,” said Canada Post.
The $13m loss compared to a profit before tax of $13m for Q3 2014. In the first three quarters of 2015, The Canada Post segment reported a loss before tax of $20 million compared to a profit before tax of $39 million in the same period a year ago.
Transaction Mail volumes continued to fall, but less than in previous quarters because of the volume attributed to the federal election. Without these additional mailings, Transaction Mail volumes would have fallen by 5.5% in Q3 2015 compared to the same period in 2014. Election mailings also helped boost Direct Marketing volumes and revenue.
“As expected, the volatility of employee benefit expenses continues to present a sizeable financial risk,” said Canada Post. “Employee benefit expenses for the Canada Post segment rose by $44m in the quarter and by $173m in the first three quarters of 2015 compared to the same periods a year ago. This resulted from a decrease in the discount rate used to calculate benefit plan costs in 2015, and was partially offset by strong pension returns in 2014.”
Transaction Mail results
In the third quarter, Transaction Mail revenue fell by $9m to $742m. Federal election mailings reduced the decline in Transaction Mail volumes (letters, bills and statements) to 9 million pieces.
In the first three quarters of 2015, Transaction Mail revenue increased by $59m or 0.4% as result of new pricing that took effect on 31 March 2014. Volumes in the first three quarters fell by 111m pieces or 5.8%.
Parcels results
Third-quarter Parcels revenue for the Canada Post segment rose by $43m or 11.3% to $380m, while volumes rose by over four million pieces or 10.4%1 compared to the same period a year ago. Revenue for Domestic Parcels, the largest product category, grew in the third quarter by $36 m or 13.2% compared to a year ago.
In the first three quarters of 2015, Parcels revenue for the Canada Post segment increased by $99m or 7.4% and volumes increased by 11m pieces or 7.8%.
Direct Marketing results
Direct Marketing revenue increased by $14m or 3.5% to $294m in the third quarter while volumes increased by 81m pieces or 5.6% compared to the same period a year ago. In the first three quarters, revenue fell by 0.6% and volume increased by 0.9% compared to the same period a year ago.
Group of Companies
The Canada Post Group of Companies, which includes the three subsidiaries as well as the core postal segmement, reported a profit before tax of $10m for Q3 2015, compared to a profit before tax of $35m in the same period a year ago. For the first three quarters, the Group of Companies reported a profit before tax of $28m compared to a profit before tax of $84m in the first three quarters of 2014.
