Canada Post more than tripled its net profit in 2009 to 281 million Canadian dollars (€211million) thanks to stringent cost cutting measures and an unplanned non-cash reduction in employee
future benefits expense.The company’s revenues, however, decreased by 5.1% to CAD 7.3 billion (€5.47 billion) in 2009due to the economic downturn and despite a drop in operational costs from CAD 7,594 (€5,691million) in 2008 to CAD 6, 955 million (€5,212 million) last year.
In 2009, Canada Post, like many other businesses, faced one of the worst economic climates indecades. The 2009 consolidated profit that rose 210% to 281 million does not truly reflect theunderlying weakness in Canada Post Corporation’s operating performance and the financial challengesahead. The company would have reported a loss in 2009 if it were not for the cost-cutting measuresresulting in a reduction of CAD 540 million, as well as an unplanned non-cash reduction of CAD 271million in employee future benefits expense.
In line with the economic slowdown, Canada Post mail volumes dropped by almost 8% in 2009,wiping out close to five years of growth, with approximately 11 billion pieces of mail delivered to15 million residential and business addresses.
Canada Post’s parcels business also suffered from the economic situation in 2009 with volumesdown 6.9% compared to 2008. Revenues dropped 2.9% to CAD 1.3 billion (€974 million). This was dueto business customers switching from air shipments to ground delivery of parcels to save costs. Adecline in the number of inbound parcels from the United States also weakened volumes with 148million delivered parcels in 2009 compared to 159 million in 2008.
“Competition in the parcel market remains strong, with leading international players expandingtheir businesses in Canada. With the global recession easing, we are cautiously optimistic that theparcels division will resume volume and revenue growth in 2010. We intend to further improvedelivery service in 2010 through the application of new technologies and equipment,” Canada Postsaid.
Purolator, the overnight courier 91% owned by Canada Post, was also affected by the economicdownturn and resulting changes in customer behaviour as well as increased competition. Purolatorrevenues decreased by 8.2% compared to 2008. In 2010, Purolator wants to focus on profitablygrowing its share of the express market.
Canada Post’s logistics unit reported revenues of CAD 151 million (€113 million) which equals adecrease of CAD 5 million from the previous year.
To manage the challenges of 2009, Canada Post focused on rigid cost reduction measures andimplemented initiatives to improve the service quality. Last year, Canada Post added bar codescanners for smaller packet-sized products in major mail-sorting plants, and launched enhancedonline tracking systems that allow for better management of delays due to weather and traffic.
Through a strategic alliance with FedEx, the Canadian postal operator supported the introductionof a northbound service launched by FedEx SmartPost for commercial shippers. The service speeds upthe delivery of parcels across the Canada-U.S. border. In addition, the company’s CAD 2 billion “Postal Transformation” modernisation programme hit key milestones in its development with a newstate-of-the-art mail processing plant in Winnipeg to be opened this June.
“Thanks to the tremendous commitment and effort by our employees and management team to reduceour operating costs, we were able to remain profitable in 2009 while maintaining our service toCanadians and improving safety for our people,” said Moya Greene, Canada Post President and CEO. “It was certainly one of our most challenging years. Looking ahead, as mail volumes are predicted todecline further, cost containment measures will not be sufficient to sustain our company. We mustcontinue to modernise and seek ways to grow our business.”
In September 2009, the Government of Canada announced the Canadian Postal Service Charter. TheCharter outlines the expectations concerning Canada Post’s service. The 2009 annual report includesthe first report on its performance against the Government’s expectations. The Corporation willcontinue to report each year on the Charter.
