New Zealand Post today pledged to expand its courier and logistics activities and restructurethe declining mail business as it unveiled a sharp rise in annual profits driven by banking results
and one-off financial items.A bounce-back by Kiwibank, a substantial one-off non-cash gain resulting from the acquisition ofDHL’s 50 per cent share in the joint venture courier and logistics business Express CouriersLimited (ECL) and the continued decline in postal revenues were key features of the 2011-12results, the group stated.
The company made a net profit of NZ$169.7 million in the year ending June 30, 2012, compared toa net loss of $35.6 million in the previous year. Excluding one-off adjustments net profit rose to$79.8 million from $41.7 million last year. Revenues moderately grew to $1.3 billion from$1.27 billion.
New Zealand Post said the profit was “pleasing” but stressed it was largely driven by asignificantly improved performance by Kiwibank and a $96.2 million gain arising from the ECLacquisition. This transaction led to the release for accounting purposes of the previouslyunrealised gain that arose when the joint venture was created in 2005, it explained.
Kiwibank, the banking subsidiary, emerged from a challenging couple of years in which it borethe brunt of bad debt provisioning resulting from flat economic conditions and the Christchurchearthquakes, the company said. The bank achieved an improved after-tax profit of $79.1 millioncompared to $21.2 million the previous year.
“The net profit figure must be considered in the context of our core postal business whichcontinues to be in decline in both revenue and volumes. Kiwis posted 54 million fewer letters inthe past year, contributing to a decline in letters revenue of $17 million,” CEO Brian Rochesaid.
“Our postal business is benefiting from improvements to product and service offerings, carefulmanagement of costs and continued improvements to our operations model. However, we haveexhausted these short-term fixes. The continuing volume and revenue decline in our traditionalcore business is further evidence we must proceed with fundamental change,” he said.
Roche said further progress had been made on the strategies to which the Board committed twoyears ago, which were to build a sustainable physical network, to deliver a superior customerexperience, to grow Kiwibank, and to create a digital future.
“We now have a 100 per cent owned courier and logistics company which is able to take advantageof the growth in the parcels and logistics markets. We are continuing to test new banking andpostal services, self service kiosk technology and store designs. Much of the work to ‘clear thedecks’ of non-performing non-core businesses has also been completed, enabling us to concentratecapital investment in New Zealand-based financial, postal and digital services,” he said.
In June, NZ Post agreed to buy DHL’s 50 per cent stakes in the two companies’ joint ventures inNew Zealand (Express Couriers Ltd) and Australia (Parcel Direct Group/Couriers Please) for $108million (€68 million). Roche explained at the time that this agreement represented a significantstep in delivering the New Zealand Post strategy. “Express delivery is a core element of ourcurrent and future strategy. Given the growth in the parcel and courier segments, this strategicpurchase supports our efforts to adapt the overall business to meet our customers’ changing needsand expectations,” he declared.
Today, Roche urged the New Zealand government to reform the country’s postal legislation to takeaccount of the sector’s structural changes. “It is imperative New Zealand Post has the regulatorycertainty to allow us to adapt to present market conditions and to plan for the future. We arecurrently constrained by the 1998 Deed of Understanding committing us to service obligations andnetwork design pre-dating the digital revolution.
“I am confident if the necessary regulatory changes are made, New Zealand Post Group has thestrategies to grow and prosper, benefiting businesses and communities. Work is ongoingwith the Government to secure changes to the Deed of Understanding,” Roche said.
