In this CEO Update and video message, Doug Ettinger provides insight into our Q2 results, including how COVID-19 affected our financial performance.
Sharing our Q2 results
As you may have learned by now, Canada Post has recorded a second quarter loss of $378 million for the months of April, May and June. While it’s important to acknowledge that this is a significant loss, I would like to share some context around this number.
First, as you may know, COVID-19 has had a massive impact on our finances.
Though parcel volumes shot up through this period, so did our costs. Meanwhile, LettermailTM and direct mail volumes both declined significantly. In total, the negative impact on our business due to COVID-19 is estimated to be $164 million. This includes an overall drop in revenue of about $46 million combined with $118 million of additional costs.
However tough that might be from a financial perspective, let’s not forget that the circumstances we collectively faced over this period were extremely tough too.
We successfully pivoted our entire operations when Canadians needed us most. On top of providing our essential service, we committed to following the guidance of public health experts to put the safety of each other and our customers first. And we will continue to follow their direction going forward.
Also impacting our financial results during the second quarter were the added costs that resulted from the arbitrator’s June ruling.
The new collective agreements with the Canadian Union of Postal Workers – one for urban employees and another for rural and suburban mail carriers (RSMC) – added net costs of $114 million in the second quarter. Most of this was related to expanded eligibility for post-employment healthcare benefits for RSMCs.
However, even without COVID-19 and the new agreements, I want you to know that we still would have reported a loss. We concluded the first half of the year with an overall loss before tax of $444 million.
So where do we go from here?
While parcel volumes remain high and both Lettermail and direct mail have started to rebound, we will continue to face big challenges ahead. But I believe we have learned so much from the last few difficult months.
Canadians and Canadian businesses now see us as truly essential. We are focusing with renewed energy on how we can remain central to the future of the country, while improving our financial performance.
I’m proud of the courage and commitment we’ve shown over the last few months and I know that we will address the challenges ahead no matter how large they may appear. And we’ll do this while continuing to put the safety of our people and the Canadians we serve first.
Thank you for everything you do, and please make it safe and make it home.