Actuarial losses on post-employment benefits of $2.2 billion recorded in
OTTAWA, Nov. 29, 2011 /CNW/ - The Canada Post Group of Companies1 today reported a loss before tax of $163 million in the third quarter
ended October 1, 2011, down from a $19-million pre-tax loss recorded in
the same period a year earlier.
The decline of the Group's profitability in the quarter was largely
driven by an unfavorable ruling against Canada Post by the Supreme
Court of Canada. As a result of this ruling, an estimate of the cost to
the Corporation has been recorded in the Group's third quarter
financial statements, resulting in a decrease in profitability for both
the Canada Post segment and the Group. The final impact of this ruling
is still being evaluated.
In the third quarter, the Group also reported actuarial losses in the
amount of $2.2 billion (recognized in Other Comprehensive Loss) on the
re-measurement of its post-employment benefits. This was mainly the
result of two factors: lower-than-expected returns from the assets of
the Group's pension plans during the quarter due to global market
volatility; and an increase in the employee benefit liabilities due to
a decrease in the discount rate, which is sensitive to declining bond
The total equity of the Corporation continues to be significantly
affected by the measurement of its post-employment benefit liabilities.
As at October 1, 2011, the Group of Companies' equity position was
negative $2.1 billion. The financial health of the Corporation is
critical, as the key to a strong pension plan is a strong sponsor.
For the first three quarters ended October 1, 2011, the Group reported a
loss before tax of $159 million, down from a $62-million pre-tax profit
recorded in the same period a year earlier.
Segmented Results - Canada Post
The Canada Post segment, consisting of the Group's core mail and parcel
delivery businesses, lost $190 million before tax in the third quarter,
down from a $49-million pre-tax loss reported by the segment in the
same period in 2010. The decline was largely driven by the unfavorable
ruling rendered by the Supreme Court of Canada. The performance by the
Canada Post segment in the quarter was affected by a clearing of the
backlog of mail resulting from the labour disruption in June 2011.
Without this temporary boost to volumes and revenues, the performance
in the quarter would have been worse.
For the first three quarters ended October 1, 2011, the Canada Post
segment lost $211 million before tax, down from a pre-tax profit of
$7 million in the same period a year earlier. The segment experienced
weaker revenues and volumes in the first three quarters compared to the
same period in 2010, driven by a cumulative estimated revenue loss of
$173 million related to the labour disruption, as well as increased
costs largely attributable to the Supreme Court of Canada ruling. This
decline was partially offset by revenues from the federal election, the
census and pricing action.
For the 39-week period ended October 1, 2011, volumes in the segment's
core Transaction Mail business were down by 2.6%, or 111 million
pieces, compared to the same period in 2010. Transaction Mail revenue
decreased by $10 million compared to the same period in 2010. Parcels
revenue declined by 5.6% in the first three quarters while volumes
declined by 1.9%. Direct Marketing revenue increased by 0.8% while
volumes decreased by 4% in the first three quarters.
Segmented Results - Purolator
In the third quarter, the Purolator segment earned a $20-million profit
before tax, down 20.7% from the $24-million pre-tax profit earned in
the same period a year earlier. Revenue increased by $33 million, or
8.7%, compared to the same period in 2010, mainly driven by pricing
action and increased volumes. However, this was more than offset by a
$37-million increase in the cost of operations, due to increases in
volumes and inflationary pressures. The Purolator segment earned $38
million before tax in the first three quarters ended October 1, 2011,
down 17.6% from the same period a year earlier.
The Canada Post Group of Companies' operations are funded by the
revenues generated by its products and services, not taxpayer dollars.
Canada Post has a mandate from the Government of Canada to remain
financially self-sufficient and to provide a standard of postal service
that is affordable and meets the needs of the people of Canada.
To access the full report in PDF, visit canadapost.ca/AboutUs and select "Quarterly Financial Reports" from the Corporate menu.
1 The Canada Post Group of Companies, or the Group, refers to Canada
Post Corporation, which includes the core Canada Post segment and
subsidiaries, Purolator and SCI Group, and the Corporation's interest
in its joint venture, Innovapost.
SOURCE Canada Post
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