USPS reports $16.7bn Q3 revenue
This was essentially unchanged from last year, after taking into account the effect of a $1.1bn non-cash change in accounting estimate that was recognized during Q3 2016.
Revenue from First-Class Mail and Marketing Mail decreased $422m and $150m, respectively, due to the continuing decline in volumes.
USPS said that the First Class and Marketing Mail revenue drops were “nearly offset” by continued growth in the lower-margin Shipping and Packages business, where revenue was up 11.3% to $473m.
The Postal Service reported a net loss of $2.1bn, which was $573m more than in Q3 2016. Controllable loss for the quarter was up $35m to $587m, which USPS said was “driven by higher transportation costs”.
Operating expenses for the quarter were down 2.4% to $18.8bn . Expenses for retiree health benefits and workers compensation declined by $869m and $1.0bn, respectively, but were partially offset by $1.2bn in higher retirement expenses that USPS said were “largely driven by changes in Office of Personnel Management actuarial assumptions and interest rates”.
“The growth in our lower-margin package business is not sufficient to make up for the accelerating mail volume declines,” said Postmaster General and CEO Megan J. Brennan. “Our financial situation is serious, but solvable. The continuation of aggressive management actions, and legislative and regulatory reform, will return us to financial stability and enable the Postal Service to maintain the long-term affordability of mail, invest in America’s mailing and shipping industry, and best serve the American public.”
Letter mail volumes declined by around 1.4bn pieces (or 4%), while package volumes grew by 133m pieces (or 11%).
“The volume declines in mail are expected to continue due to the ongoing migration from mail toward electronic communication and transaction alternatives,” said Chief Financial Officer and Executive Vice President, Joseph Corbett. “To address this trend, we have focused on innovations, including mobile and digital strategies, to improve the value of mail. We must also continue to focus on reducing expenses and improving efficiencies, including adjusting employee staffing and scheduling to match the changing workload.”