Canada Post segment records $1m profit before tax in Q2
Canada Post – which is currently tussling with the Canadian Union of Postal Workers (CUPW) in rather acrimonious contract negotiations – has had some positive news to impart, as the Canada Post segment recorded a small profit before tax of $1m in the second quarter (Q2). This is essentially a break-even result, but it does compare favourably to a loss before tax of $31m in the same period last year.
However, Canada Post also reported that its pension solvency deficit rose significantly as the discount rate dropped. The pension solvency deficit is estimated at $8.1bn as of 1 July, up from $6.1bn on 31 December.
“The large size and volatility of this obligation compared to the Corporation’s revenue and profit presents a major challenge to the Corporation’s financial self-sustainability,” commented Canada Post.
Canada Post added that although it has seen a strong performance in the parcels business and direct marketing, “growth in these areas will not be enough to pay for the pension obligations, offset the ongoing decline in Lettermail and invest in the network and customer service”.
In a statement issued on Friday, Canada Post said: “In the first two quarters of 2016, the Canada Post segment recorded a profit before tax of $45m, compared to a loss before tax of $7m in the same period a year ago, largely due to strong Parcels results.”
Focusing more on those parcels results, Canada Post continued: “In the second quarter, Parcels revenue rose by $34m or 9.2% to $404m while volumes increased by 4m pieces or 8.5% compared to the same period a year ago. In the first two quarters of 2016, Parcels revenue rose by $75m or 10.9%, while volumes increased by 9m pieces or 11.4%, compared to the same period a year ago.“