Canada Post’s pre-tax profit was lifted to C$51 million during the first quarter of 2013 thanksto the $109 million gained from the sale of its mail processing plant in downtown Vancouver instead
of a $58 million pre-tax loss that the company would have recorded otherwise.The core Canada Post segment, covering the mail and parcel businesses, reported a Q1 pre-taxprofit of C$68 million instead of a $41 million loss that it would had without the plant sale. Thepostal operator said the plant was one of its most significant properties and was disposed of inJanuary 2013, as a new multi-purpose facility is being built at the Vancouver InternationalAirport.
Canada Post’s mail volumes continued to decline by more than 136 million pieces in the firstquarter of 2013 compared to the same period a year earlier and revenue from operations was down to$1,513 million equalling a year-on-year decrease of $26 million.
Transaction mail volumes (primarily letters, bills and statements) that generate most of theCanada Post segment’s revenue declined by 1.9% due to digital substitution, the implementation ofpay-for-paper initiatives by some of Canada Post’s largest customers, particularly in the bankingand telecommunications sectors, and the highly competitive environment. Similarly, direct marketingvolumes declined by 2.9% as publications mail, publishers and consumers shifted to digitalalternatives, while unaddressed ad mail customers are reducing their spending or redirectingportions of it to other channels.
More positively, parcel volumes were up by about 300,000 items, a 4% rise in the first quarter,strengthening Canada Post’s position in the competitive B2C parcel delivery market. Parcelsrevenues amounted to $318 million, slightly down by $1 million. However, they increased 2.9% on atrading day adjustment basis for the first quarter.
“Overall revenue and volume growth reflect the continued growth in e-commerce orders ascustomers continue to order more products online. While parcels revenue and volume growth was good,parcels yield did decline in the first quarter of 2013 compared to the same period in 2012 asaverage revenue per piece dropped due to a consumer shift to cheaper, less urgent delivery productsand aggressive competition,” Canada Post explained.
The company stressed that while growth in the e-commerce market has contributed to highervolumes and revenues in its parcels business, the growth is not large enough to offset thedeclining mail volumes.
The B2B courier business Purolator, a separate group division, experienced a net loss of $9million for the first quarter of 2013 which is an improvement of 4.1% compared to the same periodlast year. Revenues from operations amounted to $379 million, a decrease of $19 million. “Theoverall decrease was mainly driven by reduced volumes due to competition and the economy,” thepostal operator said.
Looking ahead, the company concluded: “With continued volume declines, eroding revenue andlimited flexibility to make rapid adjustments given its infrastructure and high fixed costs, CanadaPost expects a substantial financial loss in 2013.”
