Profit falls at NZ Post

New Zealand Post Group confirmed a net profit after tax (NPAT) of NZ$1.3m ($0.92m) for the year ended 30 June 2010. The result is consistent with the Company’s NPAT expectation announced on 5 August and reflects difficult trading conditions and a series of significant one-off items.

The chairman, Rt Hon Jim Bolger ONZ, said in view of the difficult trading environment the company drew some satisfaction from holding the underlying operating net profit of $73.6m to just under 5% of the $77.2m normalised earnings in the 2009 financial year.

He confirmed the underlying NPAT was affected by declining mail volumes, a weaker economy and generally tight margins in a competitive business environment, especially the banking sector. These conditions resulted in reduced contributions from Kiwibank, and the postal services and data management businesses.

“However, a series of non-recurring one-off items totalling $72.4m reduced our reported profit to $1.3m for the year. These items arose in the second half of the year and related to influences outside our control or to historical issues.”

The one-off costs were:

• $19.8m arising from a taxation change introduced in the May 2010 Budget affecting the depreciation treatment of property assets.
• $17.4m of write-downs and provisioning in the international mail business.
• $5.3m relating to the write-down of various assets, including property and aircraft, whose value has been affected by economic conditions, and other adjustments.
• A reduction of $29.9m associated with ParcelDirect Group (PDG), New Zealand Post Group’s 50:50 courier joint venture with DHL in Australia.

Bolger confirmed the non-recurring items as largely non-cash expenses.  “As such, our cash position remains strong and the Group’s commercial value, as well as our debt servicing capability, is not materially affected,” he said.

The Board has declared a total dividend for the year of $6.42m.

Bolger expected market conditions to continue to be challenging in the immediate future, but was optimistic the Group would achieve its financial targets.

“As I have previously said, we are actively addressing the impact of electronic communications on our traditional mail business and the inroads online transactions are making in other parts of our business, including the Retail network.  We continue to closely manage costs and we are progressing the evaluation of options to ensure the future sustainability of our postal and retail networks in the digital world.”