The Canada Post Group returned to profit last year thanks to parcels growth and restructuringmeasures.
The group, covering the core Canada Post business, express parcels firm Purolator and severalsmaller businesses, made an operating profit of C$299 million last year compared to a C$193 millionloss in 2013. The net profit was C$198 million compared to a C$29 million deficit the previousyear. Group revenues grew by 5.5 per cent to just under C$8 billion.
The core Canada Post segment reported a C$194 million pre-tax profit compared to a loss of$125 million in 2013 while revenue grew to C$6.2 billion from C$5.9 billion the previous year.
The results were mainly due to three factors that were consistent throughout much of the year– strong growth in the Parcels business, lower employee benefit costs and new pricing measures forTransaction Mail, according to the group.
In 2014, the Canada Post segment’s revenue from Domestic Parcels, the largest Parcels productcategory, surpassed $1 billion for the first time, rising by C$85 million compared to 2013. TotalParcels revenue for the Canada Post segment increased by 8.6 per cent to more than C$1.5 billionand the parcels business now accounts for 24 per cent of overall revenues.
With the increasing popularity of online shopping, the Corporation’s role as an essentialenabler of e-commerce grew even stronger in 2014. Parcels revenue from the Canada Post segment’stop 25 e-commerce customers rose by almost 30 per cent in 2014 compared to 2013.
In contrast, the greatest challenge to Canada Post’s financial sustainability is thecontinuing decline of Lettermail. In 2014, volumes of Transaction Mail, which includes mostlyletters, bills and statements, fell by a further 5.2 per cent or 214 million pieces, compared to2013. Revenues increased by eight per cent to C$3.2 billion, however, due to price increases.
The Canada Post segment’s 2014 results were also helped by a C$181 million non-cash reductionin employee benefit costs compared to 2013. This is a result of strong pension asset returns in2013 and an increase in the discount rates used to calculate benefit plan costs in 2014. Pensioncosts remain highly volatile and are expected to increase in 2015.
Meanwhile, B2B express parcels subsidiary Purolator increased revenues slightly to just underC$1.7 billion, representing 20 per cent of group turnover, and improved its pre-tax profit to C$74million from C$66 million the previous year.
In 2014, the Five-point Action Plan resulted in significant progress in realigning the postalservice with Canadians’ increasing need for parcel delivery and declining use of paper letters,bills and statements. Canada Post said it is “encouraged” by the results of the Plan’simplementation so far, but recognises the sustainability of the postal service can only be achievedby the completion of all the Plan’s initiatives.
