US Postal Service reports $1.7B loss
Battered by the terrorist attacks and a declining economy, the Postal Service saw its first drop in volume in a decade and finished the fiscal year with a $1.68 billion loss.
Managers are scrambling to cut expenses, seeking help from Congress and discussing the possibility of speeding up a rate increase.
“The economic recession, the Sept. 11 attacks and the anthrax attacks tossed our financial situation up in the air,” Postmaster General John Potter said Tuesday.
Figures for the year that ended Sept. 30 show the agency with income of $65.8 billion and expenses of $67.5 billion. It was the second consecutive year the agency finished in the red, after making profits for five years.
Mail volume for the year totaled 207 billion items, down about 400 million from the year before. In the first two months of this fiscal year, volume remains sharply lower.
The faltering economy and increased competition were the primary causes of the losses, along with the September terror attacks, said postal Chief Financial Officer Richard Strasser.
Even though the anthrax mailings occurred after the start of this fiscal year, they too pose major financial problems for the postal service, worsening the outlook for the current year.
The terrorist attacks have had a “profound and tragic effect on the postal service,” said Robert Rider, chairman of the agency’s Board of Governors.
He said managers are making every effort to cut costs and find other sources of money so that the unexpected costs can be covered without increasing rates more than previously planned.
President Bush has released $175 million in emergency money, and postal officials have gone before Congress requesting additional aid.
Two postal workers have died of anthrax and others have been sickened. The agency faces massive costs for medical care, decontaminating builent this year is forecast to increase to 1.7 per cent next year.”
Stating that the three-month Kuala Lumpur Interbank Offered Rate (KLIBOR) was at 3.3 per cent on Nov 16, Goldman Sachs expect this rate to decline to 3 per cent over a six month horizon and to remain at that level over the next 12 months.
“We expect the consumption story will dissipate in the next six months, as employment growth slows sharply impacting inflation expectations and household income. The authorities should use their position of relative strength to exit the fixed exchange rate system as soon as possible.”
Nevetheless, the fixed exchange rate at RM3.80 to the US Dollar is still expected to remain over the next 12 months.
Explaining that the investment bank had remained dubious about calling the turn in the cycle during the strong January and April equity market rallies, Goldman Sachs said: “The main reason was, we expected the immediate sequential trade and growth data in the region to deteriorate.
“This time the data is looking more supportive. First, the latest export data for Korea, Taiwan and Singapore shows signs of a trough. Second, the lead indicators from the US manufacturing sector are looking more promising, in particular, inventories and new orders for electronic components.”
For the third factor, it said there are some initial signs that the region’s terms of trade had improved.
