Canada Post Group of Companies reports a consolidated financial loss before tax of $253 million for 2011

Labour disruption, continued Lettermail erosion, pension obligation and Supreme Court pay equity decision impact financial results

OTTAWA, May 1, 2012 /CNW/ - The Canada Post Group of Companies^* today reported that in 2011 the core Canada Post segment had its first financial loss after 16 consecutive years of profitability. On an unconsolidated basis the Canada Post segment reported a financial loss before tax of $327 million.

Four significant factors contributed to Canada Post Corporation's negative financial performance: the June 2011 labour disruption; a continued decline of mail volumes; the sizable, volatile pension obligation; and the Supreme Court of Canada's decision regarding pay equity.

The June 2011 labour disruption effectively shut down the postal system for 25 days. This had an immediate financial and competitive impact. The volumes of Transaction Mail (the bills, notices and statements that make up the Corporation's core product) continued to decline in 2011. They fell by 4.6 per cent per point of delivery, bringing the total decline per point of delivery over the last five years (2007 to 2011) to 20 per cent. Canada Post contributed $510 million to the pension plan in 2011, including $219 million in special payments. The Corporation continues to face a sizable, volatile solvency deficit of $4.7 billion in its pension obligation.

The Group of Companies' profitability was also impacted by a decision from the Supreme Court of Canada on November 17, 2011. The court ruled that some Public Service Alliance of Canada (PSAC)-represented employees of Canada Post had earned less than others in comparable jobs. The case dates back to 1983. As a result of this ruling, Canada Post has recognized an estimate of these additional costs in 2011. Detailed information around this estimate is not provided as the Corporation is still consulting with PSAC on a process to pay employees the amount that is owed in the pay equity case.

Apart from the Corporation's 2011 financial performance, deep and enduring shifts in technology and demand for postal services point to the urgent need to transform the business. Building around the two pillars of structural transformation and pursuit of growth in e-commerce and e-delivery, Canada Post has embarked on a journey to create a relevant and successful future. Together, these pillars will redefine Canada Post's role in the digital economy.

Structural transformation will involve efforts to achieve operational excellence through modernization, as well as increased customer focus, technological transformation and a plan to maximize the full potential and synergies of the Group of Companies. It is essential that this transformation also address labour costs through the collective bargaining process. This is necessary in order for Canada Post to remain competitive, to be able to continue to offer Canadian businesses and consumers affordable services, and to restore and sustain the profitability in the Corporation's mandate. Achieving a competitive labour cost structure will be crucial given that home delivery of parcels—a highly competitive business—is becoming a critical part of our future activity.

The second pillar is the Corporation's growth agenda. The focus here is on enhancing Canada Post's leadership in home delivery to capitalize on the rapid growth of e-commerce, expanding digital delivery via epost, building data and location intelligence as a growth business and maximizing the value of traditional and marketing mail.

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.

* The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned subsidiaries, Purolator Inc., SCI Group Inc. and Innovapost Inc.

To access the full report in PDF, visit canadapost.ca under About Us / Corporate / Annual Report.

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