Commercial customers made other delivery arrangements
due to labour uncertainty, which reduced volumes and revenue
OTTAWA, Nov. 25, 2016 /CNW/ - The Canada Post segment lost $60 million before tax in the third quarter, when the risk of a work disruption prompted commercial customers to make other arrangements to deliver their parcels and mail.
The net financial impact of the labour uncertainty is estimated at $100 million for the third quarter. That figure reflects the significant reduction in revenue but also includes slightly lower costs, such as less use of overtime and temporary employees, because volumes had declined sharply in all lines of business. The Corporation and the Canadian Union of Postal Workers reached tentative agreements on August 30, 2016, but volumes took much longer to recover. Employee benefit expenses were also lower in the third quarter due to a $44-million non-cash one-time gain, resulting from the new collective agreement with the Canadian Postmasters and Assistants Association (CPAA) in August 2016.
The Canada Post segment's $60-million loss before tax in the third quarter, which ended October 1, 2016, compared to a loss before tax of $13 million in the third quarter of 2015. For the first three quarters, the Canada Post segment recorded a loss before tax of $15 million, compared to a loss before tax of $20 million in the same period in 2015. The improved results over three quarters are largely due to growth in the Parcels business over the first two quarters of 2016.
The labour uncertainty in the third quarter meant that volumes in the rapidly growing Parcels line of business declined for the first time since the first quarter of 2014 and revenues declined year over year for the first time since the first quarter of 2012. Parcels revenue decreased by $30 million or 7.9 per cent while volumes declined by 2 million pieces or 5.2 per cent in the third quarter of 2016, compared to the third quarter of 2015. For the first three quarters, Parcels revenue increased by $45 million or 4.5 per cent and volumes increased by 7 million pieces or 5.9 per cent, compared to the same period in 2015.1 That growth was lifted by the results over the first two quarters. It reflects the strength of Canada Post's e-commerce strategy and its innovative solutions for retailers and consumers.
Transaction Mail results
In the third quarter, Transaction Mail volumes continued to erode as mailers adopt digital billing. They decreased by 120 million pieces or 13.8 per cent and revenue fell by $79 million or 10.8 per cent, compared to the same period in 2015, which had benefitted from the one-time impact of the October 2015 federal election. The labour uncertainty worsened the ongoing volume decline. For the first three quarters of 2016, Transaction Mail revenue decreased by $114 million or 4.3 per cent while volumes fell by 231 million pieces or 7.7 per cent, compared to the same period in 2015.1
Direct Marketing results
In the third quarter, Direct Marketing revenue decreased by $45 million or 15.2 per cent, while volumes decreased by 210 million pieces or 17.5 per cent, compared to the third quarter of 2015. These results were also affected by the labour uncertainty, and by stronger results from the same period of 2015, which had benefitted from federal election mailings. For the first three quarters, Direct Marketing revenue decreased by $64 million or 6.7 per cent while volumes fell by 295 million pieces or 7.5 per cent, compared to the same period in 2015.1
Group of Companies results
The Canada Post Group of Companies2 reported a loss before tax of $25 million in the third quarter, compared to a profit before tax of $10 million in the same period in 2015. For the first three quarters, the Group of Companies recorded a profit before tax of $19 million, compared to a profit before tax of $28 million for the first three quarters of 2015. Purolator reported a profit before tax of $32 million in the third quarter of 2016, an increase of 76.9 per cent compared to the third quarter of 2015. For the first three quarters of 2016, Purolator earned a profit before tax of $35 million, a decrease of 1.3 per cent compared to the same period of 2015.1
To read the full report in PDF, visit canadapost.ca/aboutus and select "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 of Canada.
- Variance percentages of revenue and volume were adjusted to reflect the impact of one less business (trading) day and one less paid day in the first three quarters of 2016, compared to the same period in 2015.
- The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned principal subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.
SOURCE Canada Post
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