Canada Post reports Q1 profit; Domestic Lettermail volumes decline steeply

2015/05/21

Canada Post released its quarterly financial results today.

The Canada Post segment reported a profit before tax of $24 million in the first quarter of 2015, compared to a loss before tax of $27 million for the first quarter of 2014.

The improved results were mainly due to:
 continued growth in the Parcels business; and
 tiered pricing for Transaction Mail;

They were offset by:
 higher employee benefit expenses.

Five-point Action Plan continues to deliver results

The first quarter profit shows the Five-point Action Plan is continuing to deliver results.
 We are expanding our market share in the highly competitive parcels business by creating shipping solutions for online retailers and shoppers.
 The Five-point Plan’s tiered pricing for Transaction Mail helped lift revenue as Domestic Lettermail volumes continued their historic decline.

Ongoing decline in our core business accelerates

Volumes of Domestic Lettermail, still our core business, fell by 8.4 per cent during this period. It is one of the steepest quarterly rates of decline since 2006, when Domestic Lettermail volumes peaked. It reflects the accelerating use of digital alternatives to paper.

The ongoing decline shows we still have a long way to go to create a financially sustainable postal service. We need to outpace the decline in Domestic Lettermail by completing all the initiatives in the Five-point Action Plan.

Our goal remains to secure the future of the postal service for all Canadians. We are heading in the right direction. We are growing our Parcels business and working hard to grow the highly valuable marketing mail business.

Parcels: Parcels revenue rose to $380 million, up $39 million. Volumes increased by more than 4 million pieces, or 6.5 per cent.

Transaction Mail: The decline in Domestic Lettermail volumes was offset by higher revenue from the tiered pricing structure. Transaction Mail revenue grew by $112 million to $889 million.

Direct Marketing Results: Revenue from Direct Marketing rose by $11 million to $298 million. Without three more business days in the first quarter compared to the same period last year, Direct Marketing volumes and revenue declined, but by less than one per cent.

Employee benefit expenses: Significant volatility in employee benefit expenses continues to present a sizeable financial risk to Canada Post. Employee benefit expenses rose by $70 million because the discount rate used to calculate benefit plan costs declined. Employee benefit expenses are expected to remain higher throughout 2015 than they were in 2014.

 Read the news release for full details.

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