With the benefit of savings from its business transformation efforts in 2015 and continued strong Parcels growth, the Canada Post segment reported a small profit before tax of $1 million in the second quarter.
Census mailings contributed to the essentially break-even result, but Transaction Mail volumes dropped by 3 per cent compared to the same period a year ago and would have fallen by approximately 6 per cent without the census mailings.
During this period, Canada Post’s pension solvency deficit rose significantly. It is estimated at $8.1 billion as of July 1, 2016, up from $6.1 billion at December 31, 2015, based on the market value of plan assets. The large size and volatility of this obligation compared to the Corporation’s revenue and profit presents a major challenge to the Corporation’s financial self-sustainability.
Parcels and Direct Marketing represent opportunity for Canada Post, the country’s No. 1 parcel delivery company. However, growth in these areas will not be enough to pay for the Corporation’s pension obligations, offset the ongoing decline in Lettermail and invest in the network and customer service.
Key results for the Canada Post segment compared to Q2 2015
- Revenue rose by $34 million or 9.2 per cent to $404 million
- Volumes increased by 4 million pieces or 8.5 per cent.
- Volumes fell by 28 million pieces or 3 per cent.
- Revenue increased by $5 million to $784 million.
- Since the peak year of 2006 through 2015, Lettermail volumes have fallen by 32 per cent or 1.6 billion pieces.
- Direct Marketing contributed $296 million in revenue, a decline of $4 million or 1.3 per cent.
- Volumes fell by 35 million pieces or 2.8 per cent.