Canada Post segment reports a $27-million loss before tax in first quarter as Transaction Mail volumes decline

Segment's Parcels business continues healthy growth as Domestic Parcel volumes rise 4.9 per cent

OTTAWA, May 22, 2014 /CNW/ - The Canada Post segment reported a loss before tax of $27 million for the first quarter of 2014 as Transaction Mail volumes declined by 6.9 per cent and as Domestic Parcel volumes grew by 4.9 per cent. Together, the decline in bills and statements being mailed and the growth driven by online shopping reflect Canadians' continuing shift in the use of postal services.

In the first quarter of 2014, parcel revenue for the Canada Post segment increased by $23 million, or 7.1 per cent. Canada Post is the market leader in providing business-to-consumer delivery of packages, and the first-quarter result reflects the continuing strength of its key role in enabling the success of the fast-growing online retail sector. Domestic Parcels, the largest product category, continued to show positive results as revenue increased by $14 million and volumes grew by more than 1.2 million pieces, or 4.9 per cent, compared to the same period the prior year.

Transaction Mail is mostly letters, bills and statements. Transaction Mail revenue decreased by $50 million, or 6 per cent, in the first quarter as volumes fell by 79 million pieces, or 6.9 per cent. A new tiered pricing structure for Lettermail that better reflects the cost of serving various customer segments took effect March 31, after the end of the first quarter. It is expected to have a positive effect on Transaction Mail revenue going forward. Digital alternatives are also affecting Canada Post's Direct Marketing business; revenue in the first quarter of 2014 fell by 4.9 per cent while volumes fell by 3.2 per cent.

The Canada Post Group of Companies¹ reported a loss before tax of $37 million in the first quarter, compared to a profit before tax of $51 million in the same period of 2013. The Group of Companies would have reported a loss before tax of $58 million in the first quarter of 2013 had it not been for the $109-million gain from the sale of the downtown Vancouver Mail Processing Plant.

Canada Post announced its Five-point Action Plan in December 2013. It will help Canada Post achieve sustained financial self-sufficiency by reducing costs significantly as the Corporation serves the changing needs of busy Canadians. The five initiatives are: to convert roughly five million households with delivery at the door to community mailbox delivery over five years; to adopt a new approach to Lettermail pricing; to expand the convenience of the retail network; to streamline operations; and to address the cost of labour.

In 2014, Canada Post has begun to implement each of the five initiatives. The Corporation announced the first 11 communities across Canada to make the transition to community mailbox delivery this fall and has been consulting with residents and municipalities. As mentioned, the new Lettermail pricing took effect shortly after the end of the quarter. Canada Post has opened franchise postal outlets to offer customers more convenience, and is adjusting hours in low-traffic post offices across the country. It has been further streamlining its operational network for greater efficiency. The ongoing work of addressing labour costs has also shown progress in 2014: employees represented by the Public Service Alliance of Canada/Union of Postal Communications Employees voted shortly after the quarter ended to accept the Corporation's final offer. It included measures for new employees that are more affordable for the Corporation.

To access the full report in PDF, visit canadapost.ca/aboutus and select "Quarterly Financial Reports" from the Corporate menu.

Background
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.

1. 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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