Canada Post segment reports $62-million pre-tax loss in third quarter

Despite a loss in what Canada Post calls a ‘traditionally soft quarter,’ the Crown corporation anticipates a ‘profitable 2017 largely due to parcel growth’

The Canada Post segment lost $62 million before tax in the third quarter, which is “traditionally the postal service’s slowest period of the year,” according to a statement issued yesterday.

The Canada Post segment is reporting a year-to-date profit of $13 million before tax heading into the holiday season, when millions of Canadians are expected to make purchases online.

The Canada Post segment’s $62-million loss before tax in the third quarter, which ended on Sept. 30, compares to a loss before tax of $60 million for the third quarter of last year. For the first three quarters of 2017, Canada Post reports a profit before tax of $13 million, this compared to a loss before tax of $15 million for the same period last year.

“The sustained growth in parcels was made possible by Canada Post’s strategic decision in 2011 to become a leader in e-commerce,” reads yesterday’s statement. “However, structural challenges – such as Lettermail decline and the pension funding obligation – remain significant long-term threats to financial self-sustainability.”

TRANSACTION MAIL RESULTS

Transaction Mail is mostly letters, bills and statements. These volumes for the Canada Post segment decreased by eight million pieces in the third quarter, which is “relatively flat,” according to Canada Post, when compared to the same period in 2016, which had one extra business day.

Revenue increased by $3 million (2.2 per cent) compared to the third quarter a year earlier. The increase in revenue in the third quarter of 2017 is compared to the previous year, when revenue in the third quarter of 2016 was lower as a result of fewer mailings due to labour uncertainty. Excluding this impact, Transaction Mail revenue would have declined in the third quarter of 2017 when compared to the same period in 2016.

In the first three quarters of 2017, Transaction Mail volumes decreased by 159 million pieces (5.7 per cent) compared to the same period in 2016 while revenue decreased by $92 million (3.5 per cent).

“The ongoing decline in mail volumes, due to the use of digital alternatives by consumers and businesses, remains a significant challenge for the Corporation,” reads the Canada Post statement.

PARCELS RESULTS

Parcels revenue increased by $129 million (38.9 per cent) in the third quarter while volumes increased by 16 million pieces (43.5 per cent) compared to the same period in 2016.

Domestic Parcels, the largest product category, continued to grow as revenue increased by $101 million (43.1 per cent) and volumes grew by 11 million pieces (41.4 per cent) in the third quarter. In the first three quarters of 2017, Parcels revenue increased by $257 million (22.5 per cent) and volumes increased by 32 million pieces (25.3 per cent) compared to the same period in 2016. For Domestic Parcels, revenue increased by $199 million (24.3 per cent) and volumes increased by 22 million pieces (22.7 per cent) in the first three quarters of 2017, compared to the same period in 2016.

“The increases in revenue and volumes were partially a result of increased business from major commercial customers and solid delivery performance, as well as the continued growth in e-commerce as consumers continue to order more products online. The increases are compared to the third quarter of 2016, when volumes and revenue were affected as customers made alternative delivery arrangements due to labour uncertainty.”

 

DIRECT MARKETING RESULTS

Direct Marketing volumes increased by 151 million pieces (17.1 per cent) in the third quarter compared to the same period in 2016 while revenue increased by $15 million (7.9 per cent).

“Neighbourhood Mail,” which is the largest product category by volume, saw revenue increase by $18 million (25.2 per cent) while volumes grew by 155 million pieces (24.2 per cent) compared to the same period in 2016. This was “mainly due to new and incremental sales to commercial customers,” according to the statement.

Excluding the “negative impact of the labour uncertainty” in the third quarter of 2016, Direct Marketing revenue would have decreased in the third quarter of 2017 when compared to the same period a year earlier. In the first three quarters of 2017, Direct Marketing revenue decreased by $6 million (0.1 per cent) while volumes increased by 171 million pieces (5.6 per cent) compared to the same period in 2016.

Neighbourhood Mail revenue increased by $24 million (9.3 per cent) in the first three quarters, while volumes increased by 221 million pieces (9.6 per cent) compared to the same period in 2016.

Personalized Mail and Publications Mail volumes and revenue declined in the first three quarters of 2017 compared to the same period last year.

GROUP OF COMPANIES RESULTS

The Canada Post Group of Companies, which consists of the core Canada Post segment and its three non-wholly owned subsidiaries (Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.), reported a loss before tax of $25 million for the third quarter of 2017. This was “consistent” with the third quarter of last year, according to the statement.

For the first three quarters of 2017, the Group of Companies recorded a profit before tax of $111 million—an increase of $92 million compared to the same period in 2016. Purolator recorded a profit before tax of $31 million in the third quarter of 2017, which was described as “relatively flat compared to the profit before tax of $32 million in the same period last year.”

For the first three quarters of 2017, Purolator earned a profit before tax of $84 million due to business growth—an increase of $49 million compared to the same period in 2016.

To read the full Q3 report, click here.

Keep up to date with the philatelic community

Sign up to receive our newsletter.

Canadian Stamp News

Canada

Canadian Stamp News is Canada's premier source of information about stamp collecting and related fields.

Although we cover the entire world of philatelics, the majority of our readers are Canadian, and we concentrate on the unique circumstances surrounding collecting in our native land.

Send Us Your Event

Running an event? Send it to us and we will display it on Canadian Stamp News!

Submit Event →

Subscribe To 26 Issues For Just $47.99/year

Subscribe today to receive Canada's premier stamp publication. Canadian Stamp News is available in both paper and digital forms.

Subscribe Now