Canada Post records $163m loss in third quarter
This month’s court verdict, the continuing impact from the summer’s work stoppages and a hefty $2.2bn hit from its struggling pension fund saw Canada Post Group reporting a $163m pre-tax loss for the third quarter of the year. Within the three months’ results, Canada Post included damages that could amount to around $150m stemming from this month’s Supreme Court of Canada ruling in the 28-year-long gender discrimination case.
The jump in losses from last year’s $19m third quarter pre-tax loss was worsened by a recalculation of post-employment benefits within its pension fund, the result of lower-than-expected returns from pension fund investments and an increase in employee benefit liabilities.
With the third quarter traditionally the weakest for Canada Post ahead of the fourth quarter festive peak, operational revenue grew from the second quarter’s 1.76bn to 1.80bn as the Group proessed the mail backlog from June’s strike action and national lockout.
In the year to date, the Group has recorded a $159m pre-tax loss, down from a $62m profit in the same period last year. June’s labour disruption has been blamed for $173m of costs in the nine months of 2011.
Canada Post said a contraction in the Canadian economy in the second quarter of the year turned into slow growth in the third quarter, but expectations were for continuing economic uncertainty, affecting the Corporation’s ability to generate new revenues as customers seek to cut costs.
In the core mail and parcel delivery businesses, Canada Post lost $190m in the third quarter before tax, with the Supreme Court of Canada damages recorded in the results. The division made a $49m pre-tax loss in last year’s third quarter.
Canada Post said its results could have been worse, had it not been for the temporary boost to volumes and revenues as it dealt with the backlog of mail from the summer’s work stoppages. Operational revenues in the quarter grew 2% year-on-year to $1.4m.
In the year to date, Canada Post made a $211 pre-tax loss, down from a $7m profit the same period in 2010, on a $4.3bn revenue that was down 0.6% year-on-year, with federal elections and price increases offsetting some of the costs from June’s labour disruption.
Volumes for transactional mail dropped 2.6% year-on-year in the nine months, 111m fewer mailpieces in the system compared to the first three quarters of 2010.
Parcel volumes dropped 1.9%, with 3m fewer parcels mailed during the thiree quarters, and revenues down 5.6% in the year to date. During the third quarter, parcel revenues declined 2.3% while parcel volumes increased 5.1% compared to last year’s third quarter.
Direct marketing revenues increased 0.8% in the nine months, despite a 4% decline in volumes with a 181m reduction in marketing mailpieces.
Purolator
During the third quarter, Canada Post’s 90%-owned courier company Purolator remained in the black with a $20m pre-tax profit, but this was down 20.7% on last year’s $24 profit.
Revenues at Purolator grew 8.7% year-on-year to $401m in the third quarter, thanks to price changes and increased volumes. However, Purolator saw a $37m increase in its operational costs, including an 8.6% rise in cost of labour and 12% rise in costs from processing increased volumes and from inflationary pressures.
In the year to date, Purolator made a $38m profit before tax, down 17.6% on last year’s three quarters.
Canada Post currently has around 69,000 staff, delivering 10.6bn pieces of mail a year to more than 15m addresses.
The Corporation said it is continuing its Postal Transformation programme, a $2bn effort to streamline infrastructure in response to declining mail volumes.
Going forward, the Corporation is also working to provide new products and services and generate additional revenues through digital and data services, as well as fighting for new distribution and logistics contracts.
