NZ Post profits grow strongly

A record breaking Christmas helped New Zealand Post (NZ Post) to a first half year (H1) net profit after tax of $31 million. This compares with $7 million in H1, 2018/19.

“NZ Post has delivered 34 million parcels for the six months to 31 December 2019. We’re proud to have played an essential role in delivering Christmas for Kiwis and businesses, with independent testing showing that we made 97% of our courier deliveries on time,” says NZ Post Chief Executive David Walsh.

“This strong performance is reflected in our net profit for this period of $31 million – an increase of $24 million compared to last year.”

The 2019/2020 Half Year financial results include:

– An average of 218,000 parcels delivered a day for the first six months of the year
– 23.1 million fewer letters sent (an 11% decrease) compared to the same period last year
– 176.6 million letters sent this half of the year compared to 1 billion per year ten years ago

“NZ Post is primed to continue maximising the growth and opportunities that eCommerce brings, especially in the fast-growing business-to-consumer market,” says David Walsh. “We are continuing to look to invest for the future. This coming year will be important as we plan to meet the opportunities of eCommerce and start to invest for growth.

“While there’s no doubt that the growth in profit generated from parcel delivery is good news, NZ Post continues to manage the challenge of a declining number of letters being sent,” says David Walsh.

Revenues for letters fell by $5 million in H1, with 23.1 million few letters being handled.

“The service we delivered for the Local Government Elections in 2019 boosted the number of letters sent, however we must face the reality that New Zealanders are relying less on letters to communicate. This puts NZ Post in a difficult position. We are committed to continuing to provide a letter service to New Zealand – we know how much it means to Kiwis to have the ability to have mail delivered, whether it’s an enrolment pack or a birthday card from a grandparent. Our challenge is to balance the cost of delivering mail and the reduction in the number of letters being sent, with the high value that New Zealanders place on the mail service.

“Providing a physical mail service for New Zealanders that meets the needs of both rural and urban New Zealand, and organisations that send a lot of mail, is part of NZ Post’s DNA – but it must be financially sustainable on its own. We will be taking a methodical and planned approach to this. We are keeping our shareholder, the Government, fully informed.

“As we look ahead, we continue to juggle the opportunity of a growing parcels business and planning for further growth, with the challenge of fewer letters, the declining revenue from this service and the cost of running it.

“We are also mindful that the second half of the financial year is typically softer, and this year comes against a backdrop of uncertain global trading conditions.”

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