Devastating earthquakes, a weak economy and parcel sell-offs in Australia caused New ZealandPost to tumble into a loss in the year ending June 30.
The New Zealand Post Group made a loss of NZ$35.6 million compared with a small net profit of$1.3 million for 2009/10. There was an operating loss of NZ$25 million compared to last year’sprofit of NZ$47.4 million.
The loss included a negative impact of $29.1 million as a result of the devastating Canterburyearthquakes. In addition, the company made a write-down of $35 million for the divestment andsale process of some of its Australian holdings, Parcel Direct Group (PDG). Moreover, there was $67million increase in Kiwibank bad debt provisioning and restructuring costs of $12.3 million as partof a major realignment of the business.
However, the underlying group profit, excluding one-off effects, was $41.7 million after taxcompared to $73.6 million last year. Group revenues rose to nearly NZ$1.3 billion from NZ$1.2billion last year.
Group Chief Executive Brian Roche said: “While the result is very disappointing, the group isconfident of a return to positive net profits in the coming financial year.” The underlyingperformance showed some resilience with major business units such as the traditional postalservices performing adequately in very challenging conditions, he pointed out.
But the CEO stressed: “There is a need for significant change in the way we operate parts of ourbusiness if we are to be sustainable. We have made substantial progress in implementing someof those changes and will continue the process in the coming year. A plan of action to create aviable, sustainable postal network for the future in the face of ongoing and inevitable declines inmail volumes will be put to the board this financial year.
“Work will also continue towards transformation of the store network to ensure economicviability. These changes will improve access to and convenience of services for customersutilising technology while continuing to provide a valued community presence,” he added.
Roche said the past two financial years had been extremely challenging ones for the group. In addition to weaker market conditions and the Canterbury earthquakes, the business had had tomake some tough decisions on the carrying value of assets and investments which have had negativeshort-term impacts on net profits.
“The Group has taken necessary and prudent actions which have seen us create a solid foundationto reinvigorate the business. While the challenges are significant it is an exciting time forNew Zealand Post. We are actively involved in detailed planning of the changes that willsecure our future, improve service to our customers and provide a better return to ourshareholders,” he concluded.
