Canada Post tumbled to a pre-tax loss of C$242 million in the April – June quarter due to a complex pay issue but continued to grow its parcels business rapidly.
The Q2 loss for the Canada Post segment (covering the group’s mail and parcels businesses), contrasting with a small C$27 million pre-tax profit in the second quarter of 2017, largely resulted from estimated costs associated with adjusting how delivery employees in suburban and rural Canada (RSMC) are paid.
Canada Post explained that in 2016 it agreed with the Canadian Union of Postal Workers to put the system by which RSMC employees are paid before an arbitrator. A ruling issued on May 31, 2018, gave the parties helpful guidance on several aspects and 90 days to reach an agreement. A mediation process is under way to reach a negotiated settlement. Once the process is completed, the postal operator will be in a position to disclose the financial impact of the settlement, which may differ significantly from the estimates recognized in this quarter.
Canada Post maintained strong parcels growth in the April – June quarter, with revenue growing by 19.6% to C$607 million and volumes soaring by 24.1%. Domestic Parcels, the largest product category, increased revenue by 20.5% to C$446 million on a 14.5% volume rise that was driven by e-commerce growth.
In contrast, Transaction Mail volumes fell by 5.9% and revenues by 6% in the quarter, while Direct Marketing volumes were flat and revenues dropped 2%. The Canada Post segment reported revenues of C$1,645 million in the quarter, up by 2.7% on last year.
The Canada Post Group of Companies, including express delivery unit Purolator, reported a loss before tax of C$190 million in the second quarter, compared to a profit before tax of C$67 million in the same period in 2017. Group revenues increased by 4% to C$2,142 million.
Purolator increased revenues by 9.1% to C$452 million and improved its pre-tax profits significantly, up nearly 30% to C$45 million, in the quarter.
