Effects of 2018 postal strike still being felt in first quarter

Canada Post reported a before-tax profit of $23 million in the first quarter of 2019, citing “modest” growth in its parcels business due to “the continued impact from major customers making other delivery arrangements” following last year’s five-week rotating strike.

Revenues totalled almost $1.7 billion in the first quarter – down from $26 million (1.5 per cent) from the first quarter of 2018 – while the first-quarter profit was still a $45 million decline compared to the same period last year. The increases in parcels revenue and volumes were “significantly less than in the same period last year,” reads the report, which adds revenue increased by $20 million (3.4 per cent) and volumes increased by about one million pieces (2.6 per cent).

Domestic parcels, the largest product category, drove growth in this line of business as revenue increased by $40 million (9.4 per cent) and volumes grew by six million pieces (14.4 per cent).

“The increases in revenue and volumes were driven by major commercial customers as well as the continued growth in e-commerce.”

Transaction mail volumes – the number of letters, bills and statements sent through the mail – decreased by 68 million pieces (8.1 per cent) while revenue decreased by $31 million (four per cent).

For domestic lettermail, the largest product category, volumes decreased by 61 million pieces (7.6 per cent) while revenue decreased by $22 million (3.1 per cent). The report adds this “was despite a regulated increase in the postage rate for domestic lettermail. The ongoing decline in mail volumes in the digital era remains a significant challenge.”

Direct marketing revenue and volumes were also negatively affected by the recent labour disruption “as business customers reduced their marketing expenditures with Canada Post or redirected them to other media channels,” reads the report, which is available here.

While there are “no significant changes” to Canada Post’s strategy for 2019, the Crown corporation said it remains focused on growing its parcels and direct marketing businesses “by supporting Canadians’ changing postal needs and ensuring we meet our service commitments.” Despite these commitments, there’s an ongoing risk revenue from these two lines of business – parcels and direct marketing – will not offset declining revenue from the core lettermail business.

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