Canada Post segment reports before-tax profits of $55m in 2016

The Canada Post segment reported a $55-million profit before tax in 2016, which was the segment’s third profitable year in a row.

“Our 2016 results are a positive sign, but we still face significant challenges: declining mail volumes; sizeable pension obligations; comparatively high labour costs; and the need to invest in our network to keep up with growing parcel volumes,” reads the Crown corporation website. “We believe these challenges can be solved.”

The segment’s before-tax profit of $55 million compares to a before-tax profit of $63 million in 2015.

Parcels revenue has grown $521 million since 2011. The Canada Post segment delivered one million parcels on 34 separate days in 2016. It reached its first million-parcel day in 2012, when it occurred twice.

On Dec. 5, 2016, the Crown corporation delivered 1.52 million parcels, an all-time one-day record. Canada Post is also the only company to deliver to all addresses across the country, surpassing the 16-million mark in 2016.

PARCELS

In 2016, parcels revenue from the Canada Post segment increased by $92 million or 5.6 per cent compared to 2015. At 195 million, volumes increased by 14 million pieces or 7.7 per cent compared to 2015. Domestic parcels volumes grew by 11 million pieces or nine per cent compared to 2015. Inbound parcels volumes—from the U.S. and the rest of the world—increased by 8.4 per cent compared to 2015, driven particularly by strong growth from Asia Pacific countries.

Parcels continue to generate an increasing proportion of Canada Post’s revenue. Parcels generated 28 per cent of the segment’s revenue in 2016; by comparison, parcels generated 26 per cent of revenue in 2015 and only 21 per cent in 2011.

TRANSACTION MAIL

Volumes in transaction mail—the Canada Post segment’s largest line of business—continued their decade-long decline in 2016. Volumes fell by 286 million pieces or 7.8 per cent compared to 2015. Revenue fell by $153 million or 4.8 per cent compared to 2015. At $3.0 billion in 2016, transaction mail generated 49 per cent of the Canada Post segment’s operating revenue of $6.2 billion. In 2011, transaction mail had generated 53 per cent of the segment’s revenue.

Canadians mailed 1.8 billion fewer pieces of domestic lettermail or 37 per cent less in 2016 than they did in 2006—the year that mail volumes reached their historic peak.

DIRECT MARKETING

In 2016, direct marketing revenue fell by $67 million or 5.6 per cent to $1.14 billion, and volumes decreased by 261 million pieces or 5.3 per cent compared to 2015. In another sign of the ongoing disruption of a paper-based industry by digital technology, publications mail volumes fell 9.6 per cent in 2016 as mailed subscriptions of magazines and similar material continued to decline.

To read the full report in PDF, click here.

PROFITS SHOW POTENTIAL: UNION

The Canadian Union of Postal Workers (CUPW), which represents the majority of Canadian postal workers, responded the Canada Post’s 2016 annual report.

“Canada Post is a public sector success story,” said CUPW National President Mike Palecek. “For years, they’ve tried to cut our public services and jobs by claiming the sky is falling. Their dire predictions have never materialized.”

Palecek added the postal system has consistently made money and could continue to do so.

“We want to see a plan that ensures the future viability of the postal service,” he said. “Around the world, post offices are expanding services to bring in new revenue. This country urgently needs services such as broadband, postal banking, services at the door for seniors and electric charging stations. Canada Post could offer solutions. Instead, they offered a raft of service cuts that wasted hundreds of millions of dollars.”

Palecek said the union also hopes the government will make good on its election pledge to restore home mail delivery.

“The prime minister promised to restore door-to-door delivery on the campaign trail. It’s time for the Liberals to live up to their promises.”

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