COVID-19 drives $378M Q2 loss for Canada Post

Canada Post reported a second-quarter (Q2) pre-tax loss of $378 million “largely due to the significant impact COVID-19 had on revenue and costs,” according to a statement issued by the Crown corporation on Aug. 21.

The Q2 report highlights an “unprecedented growth in parcels volume” driven by online shopping; however, this growth was outpaced by an ongoing decline in transaction mail and direct marketing volumes and revenues.

“As the country responded to COVID-19, Canadians turned to Canada Post to provide an essential service,” reads the Aug. 21 statement, which adds the Crown corporation “saw a dramatic shift in what it was asked to deliver” as most people were forced to stay home and many businesses closed their doors.

In Q2, parcels revenue grew by $226 million (35.41 per cent) as volume increased by 26 million pieces (35.5 per cent) compared to the same period last year.

Meanwhile, the volume and revenue of transaction mail – mostly letters, bills and statements – fell by 102 million pieces (14.7 per cent) and $104 million (15.4 per cent), respectively.

Direct marketing took the biggest hit with volume and revenue falling by 652 million pieces (53.4 per cent) and $126 million (46.4 per cent), respectively, in Q2.

PANDEMIC COST CANADA POST $118M

Canada Post’s total revenue shortfall due to COVID-19 is estimated at $46 million while increased costs related to the pandemic are nearing $120 million.

The Crown corporation also pointed to “added costs” stemming from this June’s arbitrator’s ruling that resulted in new collective agreements with the Canadian Union of Postal Workers (CUPW). Made June 11, the ruling was spurred by weeks of rotating strikes in late 2018.

“The new collective agreements, one for urban employees and another for Rural and Suburban Mail Carriers (RSMCs), added net costs of $114 million in the second quarter,” according to the Aug. 21 Canada Post statement. “Most of this was related to expanded eligibility for post-employment healthcare benefits for RSMCs.”

Through the first half of the year, Canada Post recorded a pre-tax loss of $444 million (compared to a $27 million loss during the same period last year).

“Although COVID-19 and the new collective agreements with CUPW contributed to the loss, the Canada Post segment would have still incurred a loss without these factors,” added the Aug. 21 statement.

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