Canada Post recorded a $94-million loss before tax in the third quarter (July, August and September), mainly due to the costs of implementing an arbitrator’s final pay equity ruling on how much delivery employees in suburban and rural Canada are paid.
For the first three quarters of 2018, Canada Post is reporting a loss before tax of $266 million, compared to a profit before tax of $13 million for the same period in 2017. Without costs related to the pay equity ruling, we would have reported a small profit before tax for the first three quarters of 2018.
Pay equity costs and the impact of rotating strikes in October and November are major factors in Canada Post projecting a loss for 2018.
However, our Parcels business continues to grow strongly, and Canada Post remains the country’s leading parcel delivery company. We’ve grown our Parcels revenue year over year in 25 of the last 26 quarters.
Key results for the Canada Post segment in Q3 2018 compared to Q3 2017
- Parcels revenue increased by $106 million or 21.2 per cent.
- Volumes increased by 14 million pieces or 23.3 per cent.
- Over the first three quarters of 2018, Parcels revenue increased by $322 million or 21.8 per cent, and volumes increased by 44 million pieces or 26.7 per cent when compared to the same period in 2017.
- Transaction Mail volumes have been eroding for 12 straight years.
- Volumes decreased by 35 million pieces or 4.6 per cent, while revenue decreased by $24 million or 3.6 per cent.
- For the first three quarters of 2018, Transaction Mail volumes decreased by 119 million pieces or 4.9 per cent and revenue decreased by $103 million or 4.6 per cent, compared to the same period in 2017.
- Direct Marketing revenue decreased by $5 million or 1.9 per cent.
- Volumes decreased by 44 million pieces or 3.9 per cent.
- Over the first three quarters of 2018, Direct Marketing revenue decreased by $9 million or 1.1 per cent and volumes decreased by 54 million pieces or 1.5 per cent when compared to the same period in 2017.
The Canada Post segment is reporting a $242-million loss before tax in the second quarter, which ended June 30, 2018. This is mainly in recognition of estimated costs associated with adjusting how RSMC employees are paid.
Discussions are under way with the Canadian Union of Postal Workers to reach an agreement to resolve the issue of pay equity for RSMC. As we continue to work towards a meaningful resolution, we have an obligation to reflect the estimated financial impact in the corporate financial results.
The business continues to see strong growth in e-commerce. In the second quarter, we remained the country’s leading parcel delivery company. We have grown Parcels revenue year over year in 24 of the last 25 quarters – dating back to 2012.
Key results for the Canada Post segment in Q2 2018 compared to Q2 2017
Parcels revenue grew by $106 million or 19.6 per cent
Parcels volumes increased by 13 million pieces or 24.1 per cent
Domestic Parcels continued to grow strongly, as revenue increased by $81 million or 20.5 per cent and volumes grew by 6 million pieces or 14.5 per cent.
Transaction Mail revenue decreased by $33 million or 6 per cent
Volumes decreased by 34 million pieces or 5.9 per cent
The ongoing decline in mail volumes remains a significant challenge.
Revenue fell by $1 million or 2 per cent
Volumes grew by 13 million pieces but fell by 0.6 per cent when adjusted for trading days
Revenue for Neighbourhood Mail increased by $4 million or 1.3 per cent while volumes increased by 27 million pieces or 1.3 per cent.
(All revenue amounts for 2017 were restated as a result of new accounting standards.)
The Canada Post segment is reporting a $70-million profit before tax for the first quarter of 2018, which ended March 31.
The growth in Parcels volumes was driven by strong performance from major commercial customers and by Canada Post’s solid delivery performance as consumers order more products online. The growth continues the positive momentum Canada Post achieved in 2017, when employees delivered record Parcels volumes.
Revenue for Q1 2017 was restated as a result of new accounting standards.
Key results for the Canada Post segment in Q1 2018 compared to Q1 2017
Parcels revenue grew by $110 million or 24.6 per cent.
Parcels volumes increased by 17 million pieces or 33.0 per cent. Some of that growth occurred as Transaction Mail Inbound Letter-post migrated to Parcels due to changes in international induction procedures.
Transaction Mail revenue decreased by $46 million or 4.1 per cent.
Volumes decreased by 50 million pieces or 4.0 per cent.
Revenue decreased by $3 million, which is an increase of 0.5 per cent when adjusted for trading days. Volumes fell by 23 million pieces or 0.5 per cent.
Revenue for Neighbourhood Mail remained constant while volumes decreased slightly, by seven million pieces.
The Canada Post segment today reported a $74-million profit before tax for 2017, largely due to unprecedented growth in its parcels business. It was the segment’s fourth profitable year in a row.
In 2017, for the first time, Canada Post grew Parcels revenue to more than $2 billion.
Annual Parcels revenue has grown by over $900 million since 2011, the year Canada Post pivoted the business to focus on e-commerce. In 2017, Parcels revenue growth of $393 million outpaced the $124 million decline in revenue from Transaction Mail.
A significant challenge remains: With the number of addresses growing each year, the number of pieces of Transaction Mail we deliver to each address has declined 47.7 per cent since 2006.
Key results for the Canada Post segment compared to 2016.
Revenue grew by $393 million or 23.1 per cent in 2017 to $2.1 billion.
Volumes rose by 47 million pieces or 24.5 per cent. Canada Post delivered one million or more parcels on a single day 67 times in 2017 – including 40 days in a row during the holiday season.
Parcels now generate 33 per cent of the segment’s revenue, up from 28 per cent in 2016 and only 21 per cent in 2011.
Revenue from Neighbourhood Mail, the largest product category by volume, grew 6.9 per cent and volumes grew by 7.5 per cent compared to 2016.
Overall, Direct Marketing revenue fell $17 million or 1.1 per cent and volumes increased by 166 million pieces or 4 per cent.
With Canadians’ extensive use of digital technology, mail volumes continue to decline significantly. Volumes fell by 5.5 per cent or 200 million pieces. Revenue fell by 3.7 per cent or $124 million. Transaction Mail generated 45 per cent of the segment’s revenue.
Canadians mailed two billion (41 per cent) fewer pieces of Domestic Lettermail in 2017 than in the peak year of 2006.
Despite posting a loss in what is traditionally the slowest period of the year, we expect to end 2017 with a profit before tax, largely due to growth in our Parcels business.
For the first three quarters of 2017, Canada Post reported a profit before tax of $13 million. In the fourth quarter, we expect a record online holiday shopping season. We delivered one million or more parcels on a single day a record 38 times in the first three quarters of 2017. That’s more than the record of 34 days in all of 2016.
The Canada Post segment’s $62-million loss before tax in the third quarter, which ended September 30, 2017, compares to a loss before tax of $60 million for the third quarter of 2016.
Key results for the Canada Post segment in Q3 compared to Q3 2016
Parcels revenue increased by $129 million or 38.9 per cent.
Volumes increased by 16 million pieces or 43.5 per cent.
Over the first three quarters of 2017, Parcels revenue increased $257 million or 22.5 per cent and volumes increased by 32 million pieces or 25.3 per cent compared to the first three quarters of 2016.
Transaction Mail volumes have been eroding for 11 straight years.
Volumes decreased by 8 million pieces, which is relatively flat compared to the same period in 2016, which had one extra business day. Revenue increased by $3 million or 2.2 per cent.
The increase in revenue in third quarter of 2017 is compared to Q3 2016, when there was lower revenue and fewer mailings due to labour uncertainty. Excluding this impact, Transaction Mail revenue would have declined in the third quarter of 2017.
Direct Marketing revenue increased by $15 million or 7.9 per cent.
Volumes increased by 151 million pieces or 17.1 per cent.
Excluding the negative impact of the labour uncertainty in Q3 2016, Direct Marketing revenue would have decreased in the third quarter of 2017.