2015/03/27
The Canada Post segment reported a profit before tax of $194 million in 2014 as the Five-point Action Plan began to take hold.
The results were mainly due to three factors:
• strong growth in the Parcels business;
• new tiered pricing for Transaction Mail; and
• lower employee benefit costs.
While we all should be encouraged by these results, there is still a long way to go to create a financially sustainable postal service. We need to outpace the impact of the ongoing decline in Lettermail volumes by completing all the initiatives in the Five-point Action Plan. That will take time.
For example, it will take four more years to convert all the roughly 5 million addresses to community mailboxes – and more than half the financial benefit of the plan is from that initiative. Most of the savings are coming later, and there will be ups and downs before we are financially sustainable.
Key results compared to 2013
Parcels: Revenue from our top 25 e-commerce customers rose by almost 30 per cent in 2014. Revenue from Domestic Parcels surpassed $1 billion for the first time, rising by $85 million. Canada Post’s total Parcels revenue increased by $120 million to more than $1.5 billion and volumes increased by seven million pieces. A very successful holiday season made an important contribution to the growth of our Parcels business.
Transaction Mail: Volumes fell by 5.2 per cent or 214 million pieces in 2014. Compared to 2006, Domestic Lettermail volumes fell by 1.4 billion pieces, or 28 per cent. The tiered pricing structure contained in the Five-point Action Plan helped to offset the impact of this steep and continuing volume decline. As a result, Transaction Mail revenue rose by $238 million.
Direct Marketing: Volumes fell by 2.2 per cent in 2014. Marketing mail still generates more than $1.2 billion a year for Canada Post.
Employee benefit costs: A $181-million non-cash reduction in employee benefit costs was a result of strong pension asset returns in 2013 and an increase in the discount rates used to calculate these obligations. Pension costs remain highly volatile and are expected to increase in 2015.
The Canada Post Group of Companies reported a profit before tax of $269 million in 2014.
Read the news release and the Annual Report for full details.