New Zealand Post has unveiled a 34% rise in net profits for the year ending June 2015 thanks mostly to proceeds from selling Australia’s Couriers Please and with a slight improvement in operating results.
The postal group saw revenues drop by 0.5% to NZ$1,643 million but underlying net profits rose 3% to NZ$128 million while overall net profits were 34% higher at NZ$143 million.
The sale of Australian-based courier company Couriers Please for A$95 million during the year contributed an excellent return on the Group’s investment, reporting a gain on sale of NZ$46 million, the group pointed out.
Chief Executive Brian Roche said overall the result was pleasing given market conditions and described as encouraging the significant operational change achieved in 2014/15 which were important steps in the group’s transformation to a modern parcels, mail and financial services company.
Kiwibank performed well and contributed the vast majority of profits, off the back of net interest margin growth, Roche said. The bank’s strongest result yet rewarded years of investment by its parent company, the New Zealand Post Group, with its first ever dividend in FY15.
International parcel volume grew strongly in FY 2015, while domestic parcel volume also increased “but not as much as we need it to”, Roche said. Volume growth will be a key focus again this year.
However, the ongoing decline in the core letters business, a softening global and domestic economy and strong competition in all its markets mean New Zealand Post will have to move faster again this year to maintain positive momentum.
“We still have some way to go to put our mail and logistics business on a sustainable footing. Letter volumes declined by 10% last year and are expected to keep falling by at least that amount annually,” the CEO commented.
“This means we remain in a period of substantial and ongoing change. We will have to keep innovating and driving further reduction in operational and support costs so that we can do more than hold our own, and transform ourselves in the eyes of our customers.“
Organisational changes during the last financial year included realigning courier and postal parts of the business to become more sharply focused on the customer, reducing costs and duplication and investing to significantly improve processes and capabilities. Significant progress was also made on the development of digital solutions in areas including e-commerce.
The most significant structural changes completed were the move to alternate day delivery of standard mail in 30 cities and towns – with few compulsory redundancies and no drop in delivery standards – and the completion of a two-year process to centralise mail processing centres, from 55 centres down to three. In addition, Kiwibank accelerated the shift of postal and banking services from group-owned stores to locally-owned businesses.
Roche said these and other achievements were critical towards making the group’s businesses more agile and customer focused, and emphasised that maintaining a fast pace of change this year is “both necessary and critical”.
“While the steps we have taken were well signalled and have been carefully implemented, we recognise they represent change for some of our staff, customers and stakeholders – who are vital to our ongoing success. We will continue to work hard to bring people with us as we transform the business,” Roche concluded.
