Canada Post has reported a healthy profit for the first quarter of this year but is keeping on with its controversial mail delivery cutbacks despite criticism.
Under a five-year Action Plan unveiled in December 2013 to return the corporation to long-term financial self-sufficiency, the government-owned postal operator will phase out home delivery of letters to some five million addresses in favour of community mailboxes with individual compartments per household.
Canada Post has so far installed community mailboxes for some 100,000 addresses and expects to have completed some 900,000 conversions by the end of this year, it said in its Q1 report. It underlined that it is working with officials, authorities and residents in the transformation, and encouraging feedback.
According to broadcaster CBC, CEO Deepak Chopra stressed yesterday that the corporation was acting now to reduce mail delivery costs “to avoid becoming a burden on taxpayers for hundreds of millions of dollars” in the future.
But the opposition NDP party has committed itself to restoring home delivery if it wins the general election this autumn, a move welcomed by the CUPW union which is campaigning against the delivery cutbacks.
In the first quarter of this year, the Canada Post Group of Companies, covering the core Canada Post business, parcels subsidiary Purolator and smaller businesses, reported a pre-tax profit of $22 million in the first quarter of 2015 compared to a pre-tax loss of $37 million for the same period of 2014. Group revenue rose by 5.4% to C$2.06 billion.
The Canada Post segment reported a pre-tax profit of $24 million compared to a loss of $27 million for the first quarter of 2014. The improvement was mainly due to continued growth in the Parcels business and tiered pricing for Transaction Mail, which combined into a 6.4% rise in revenues to C$1.64 billion.
Domestic Lettermail volumes dropped by 8.4% in the three months, as Canadians continued to switch to digital communications. But Transaction Mail revenue grew by 9.1% to $889 million due to the tiered pricing structure that took effect at the start of the second quarter of 2014 with the aim of offsetting the volume decline.
Meanwhile, Canada Post said its focus on delivering innovative solutions for e-tailers, as well as for consumers who are looking for more flexibility in how they receive their online purchases, is continuing to yield strong results. First-quarter Parcels revenue for the Canada Post segment rose by 6.2% to $380 million while volumes increased by 6.5%.
“The increase in revenue and volumes was propelled by a strong performance from our major commercial customers and our solid delivery performance. It reflects the growth in the business-to-consumer e-commerce delivery market as customers continue to order more products online,” the group commented.
Purolator, the express parcels subsidiary, increased Q1 revenues slightly to C$402 million and reduced its pre-tax loss by 45% to C$6 million.
