Canada Post segment reports profit before tax of $24 million for the first quarter of 2015

May 21, 2015, 14:00 ET from Canada Post

Domestic Lettermail volumes fell 8.4 per cent accelerating the ongoing decline in the core business

OTTAWA, May 21, 2015 /CNW/ - The Canada Post segment reported a profit before tax of $24 million for the first quarter ended April 4, 2015, compared to a loss before tax of $27 million for the first quarter of 2014. The results were mainly due to continued growth in the Parcels business and tiered pricing for Transaction Mail.

In the first quarter, volumes of Domestic Lettermail – the letters, bills and statements that are Canada Post's core business – fell by 8.4 per cent1 or 41 million pieces compared to the same period a year ago. This trend further reinforces that Canadians are accelerating their adoption of digital means to receive important mail. Since their peak, Domestic Lettermail volumes have fallen every year and in 2014, Canadians sent 1.4 billion fewer pieces of mail than in 2006.

Significant volatility in employee benefit expenses continues to present a sizeable financial risk to the Corporation. Employee benefit expenses for the Canada Post segment rose by 18.1 per cent1 or $70 million in the first quarter compared to the same period a year ago. This was due to a decrease in the discount rates used to calculate benefit plan costs in 2015, partially offset by strong pension asset returns in 2014. Employee benefit expenses are expected to remain higher throughout 2015 when compared to 2014.

Transaction Mail results

The decline in Lettermail volumes was offset by higher revenue from the tiered pricing structure that took effect at the start of the second quarter of 2014. Transaction Mail revenue grew by $112 million or 9.1 per cent1 to $889 million in the first quarter while volumes fell 8 per cent1 from the same period a year ago. The pricing structure has helped to offset declining Transaction Mail revenues, contributing to the Corporation's financial self-sustainability so it does not become a burden on taxpayers.

Parcels results

Canada Post's focus on delivering innovative solutions for e-tailers, as well as for consumers who are looking for more flexibility in how they receive their online purchases, is continuing to yield strong results. First-quarter Parcels revenue for the Canada Post segment rose to $380 million, up $39 million or 6.2 per cent1 compared to the same period a year ago, while volumes increased by more than 4 million pieces or 6.5 per cent.1

Direct Marketing results

Revenue from Direct Marketing rose by $11 million to $298 million in the first quarter of 2015 compared to the same period in 2014, while volumes grew by 47 million pieces. Both revenue and volumes declined by less than 1 per cent1 in the first quarter of 2015 compared to the same period in 2014.

Group of Companies

The Canada Post Group of Companies2 reported a profit before tax of $22 million in the first quarter of 2015 compared to a loss before tax of $37 million for the same period of 2014.

Background

The operations of the Canada Post Group of Companies are funded by the revenue generated by the sale of its products and services, not taxpayer dollars. Canada Post has a mandate from the Government of Canada to remain financially self-sufficient and to provide a standard of postal service that is affordable and meets the needs of the people of Canada.

1 Variance percentages of revenue, cost of operations and volume were adjusted to reflect the impact of the additional three business (trading) days and four additional paid days in the first quarter of 2015, compared to the first quarter of 2014.

2 The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned principal subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.

 

SOURCE Canada Post



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