Canada Post profits collapse

Canada Post saw profits before tax collapse to $63 million in 2015, from $194 million in 2014.

The Canadian postal operator tried to explain that the profit was modest in comparison to 2014 because it is facing the significant challenges of “declining mail volumes, an increasing number of addresses to serve each year, significant pension obligations and the ongoing need to invest in  infrastructure to continue to serve Canadians”.

Parcel volumes seem to be climbing. This was balanced with a decline in bills and letter volumes in the order of 250,000 pieces.

Canada Post will focus hard on parcels growth. In a statement it said, “The Canada Post segment’s expanding role as an essential enabler for online shoppers and retailers drove parcel deliveries to new heights in 2015. Following an unprecedented back-to-school surge in online sales in the third quarter, deliveries reached new records for the Canada Post segment. To meet the growing demand for parcel deliveries to Canadians, Canada Post responded with 16 delivery days of one million or more parcels each, and delivery of 2.2m parcels over eight weekends. The Canada Post segment Parcels revenue rose by 9.1% in 2015 compared to 2014, reaching $1.65bn and making Canada Post the largest parcel company in the country.”

Commenting on the mail sector, Canada Post said: “Volumes of Domestic Lettermail, the largest product category within Transaction Mail, declined by 5.2% or 187m pieces compared to 2014. Since Canadians’ use of paper bills, statements and letters peaked in 2006, Domestic Lettermail volumes have fallen by 32%, or 1.6bn pieces.”

The new Canadian government has instigated a review of Canada Post with a view to instituting more palatable reforms than the ‘community mailbox’ scheme that was being rolled out when it came into power.

Canada Post responded by saying that it “welcomes” the review and it is “committed to actively participating in the process to help determine the best path forward given the ongoing challenges faced by the postal system”.