Canada Post achieved strong parcels growth and higher express profits last year but overall profits weakened due to the continuing mail business decline.
The Canada Post Group of Companies, covering the core Canada Post business, express delivery subsidiary Purolator and several small logistics firms, saw revenues drop by 1.6% to C$7.9 billion last year. Operating profits dropped by 12% to C$149 million, pre-tax profit weakened to C$114 million and net profits were down 18% at C$81 million.
The Canada Post segment (mail and parcels) had revenues of just under C$6.2 billion compared to more than C$6.3 billion in 2015, and its pre-tax profit dropped to C$55 million from C$63 million.
The mail business continued to decline last year. Transaction mail volumes fell by 7.8% and revenues were 4.8% lower at C$3 billion. Direct Marketing revenue fell by 5.6% to C$1.14 billion on a 5.3% volume decline.
In contrast, the parcels business grew strongly last year, maintaining Canada Post’s position as the country’s leading parcel delivery operator.
Parcels revenue increased by 5.6% to C$1.7 billion with volumes up by 7.7% to 195 million pieces. Domestic volumes grew by 9% driven by e-commerce growth in Canada. Inbound volumes – from the U.S. and the rest of the world – increased by 8.4%, driven particularly by strong growth from Asia Pacific countries.
Another success was express delivery subsidiary Purolator which improved its pre-tax profit to C$67 million in 2016 from C$56 million the previous year. The company’s revenues weakened slightly to C$1.53 billion.
The logistics business SCI Group made a stable pre-tax profit of C$20 million on revenue of C$259 million.
“The year-end results were a positive sign considering the significant challenges facing the company. With declining mail volumes, less than half of the (Canada Post) segment’s revenue in 2016 was generated by Transaction Mail, or letters, bills and statements. In addition to that issue, the Corporation is faced with the challenges of significant pension obligations, labour costs and the need to invest in network capacity to keep up with growing parcel volumes,” the postal group pointed out.
