Canada Post earns profit, gets boost from parcels and lower pension costs
OTTAWA — The Canada Post Group of Companies reported Wednesday a net profit of $67 million in the second quarter, boosted by growth in its parcel delivery business and lower pension costs
The result was up from a loss of $50 million in the same period a year ago as revenue for the group, which includes the postal service, the Purolator courier service and other businesses, totalled $2.007 billion for the 13 weeks ended June 28, up from $1.862 billion a year ago.
“When our post office has been profitable for most of the last two decades, the types of cuts that Canada Post and the (federal) Conservatives are trying to impose on us are completely unnecessary,” Denis Lemelin, national president of the Canadian Union of Postal Workers, said in a statement.
“We need to do what the rest of the world is doing and make the post office a better service, not a lack of service.”
Canada Post, the group’s largest division, earned $42 million in the second quarter, compared with a loss of $71 million in the same period a year earlier.
The traditional post office segment saw its revenue from operations climb 10 per cent to $1.56 billion, up from $1.35 billion in the comparable period of 2013, helped by higher stamp prices, provincial elections in Ontario and Quebec and increased parcel shipments.
Transactional mail revenue was $823 million, up from $732 million a year ago, even as the volume of mail slipped 2.3 per cent. Parcel revenue increased by 11.3 per cent to $353 million in the second quarter compared with $322 million a year ago.
Direct marketing revenue slipped to $308 million from $310 million, while other revenue totalled $75 million, up from $71 million in the same quarter last year.
Also helping boost the results was a $58-million reduction in employee benefit costs due to strong pension fund investment returns and an increase in interest rates used to calculate pension costs. However, the company warned that future employee benefit costs, including pensions, continue to be “high volatile and unpredictable.”
Meanwhile, Purolator earned $20 million for the quarter on revenue from operations of $427 million, up from a profit of $18 million on $412 million in revenue in the same quarter last year.
Canada Post’s logistics business, which includes SCI Group, earned $3 million on $52 million in revenue from operations, up from $2 million on $43 million in revenue a year ago.
The Crown corporation announced a plan late last year to phase out home delivery within five years and raise stamp prices.
It also said it would look to eliminate 6,000 to 8,000 positions over the same time period, mainly through attrition.
Canada Post said it continues to stay on course with its plan to cut down operating costs. In February, it installed community mailboxes for 100,000 addresses in 11 communities across Canada.
A total of 1.17 million conversions will be completed by 2015. It also raised prices for letter mail to better reflect inflation and operating costs.