Growth in parcel volumes by 2 million pieces year to date reflects
continuing shift in consumers' needs
OTTAWA, Nov. 21, 2013 /CNW/ - The Canada Post segment today reported a loss before tax of $129 million
for the third quarter as a 7.3-per-cent decline in Transaction Mail
volumes outweighed solid growth in both revenue and volumes in its
market-leading Parcels business. With these results, the Canada Post
segment is on track to record a substantial loss in 2013.
The Canada Post Group of Companies1 reported a loss before tax of $109 million for the third quarter,
compared to a loss before tax of $145 million in the third quarter of
2012.2 For the first three quarters of 2013, the Group of Companies' loss
before tax was $134 million, compared to a loss before tax of $298
million in the first three quarters of 2012. The loss for the first
three quarters of 2013 was mitigated by the $109-million gain from the
sale of the downtown Vancouver mail processing plant in January 2013.
Without the sale, the Group of Companies' loss before tax for the first
three quarters would have been $243 million.
Canada Post segment results
The Canada Post segment's loss before tax of $129 million in the third
quarter compares to a loss before tax of $161 million in the third
quarter of 2012, an improvement mostly due to labour savings. The
segment recorded a loss before tax of $165 million for the first three
quarters, compared to a loss before tax of $322 million in the first
three quarters of 2012. Again, the sale of the Vancouver plant reduced
the loss over the first three quarters by $109 million.
With its market-leading position in the business-to-consumer e-commerce
delivery market, Canada Post is a key enabler of e-commerce and is
benefitting from the increasing popularity of online shopping. Parcel
revenue increased by $32 million or 11.2 per cent in the third quarter
and volumes increased by more than one million pieces or 4.2 per cent
compared to the same period last year. Over the first three quarters,
total parcel volumes increased by about two million pieces or 2.8 per
cent compared to the same period in 2012. As encouraging as the Parcels
growth is, it alone is not enough to offset larger declines in
Transaction Mail volumes.
Transaction Mail, which is mostly letters, bills and statements,
generates approximately 50 per cent of the Canada Post segment's
revenue. For the third quarter, Transaction Mail volumes fell by 73
million pieces or 7.3 per cent compared to the same period last year.
In the first three quarters, volumes declined by 184 million pieces or
5.1 per cent compared to the same period last year. Direct Marketing
volumes in the third quarter were down by 0.7 per cent and down by 1.3
per cent for the first three quarters, compared to the same periods
Productivity improvements and a reduction in headcount contributed to
reducing the Canada Post segment's labour costs by $22 million or 2.9
per cent in the third quarter and by $65 million or 2.7 per cent in the
first three quarters compared to the same periods in 2012.
The need for additional liquidity in 2014
With the historic shift away from paper-based communications, the
Corporation's current business model does not allow it to achieve
sufficient profitability and cash flow to support its operations. Also,
in early 2014, Canada Post expects to reach the maximum legislated
pension relief from special payments to reduce the $5.9 billion
solvency deficit in its pension plan (as of December 31, 2012), which
is fully funded on a going-concern basis. In resuming its special
payments, the Canada Post segment will have to contribute an estimated
$1 billion, on top of current service contributions, in 2014 alone.
Based on current financial projections, Canada Post believes it will
require additional liquidity by mid-2014, and is exploring with its
Shareholder options to address the liquidity challenge.
To access the full report in PDF, visit canadapost.ca/aboutus and select "Quarterly Financial Reports" from the Corporate menu.
The operations of the Canada Post Group of Companies are funded by the
revenue generated by the sale of 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
The Canada Post Group of Companies consists of the core Canada Post
segment and its three non-wholly owned principal subsidiaries,
Purolator Inc., SCI Group Inc. and Innovapost Inc.
Results for 2012 were restated due to the adoption of new and revised
accounting standards, effective January 1, 2013.
SOURCE: Canada Post
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