Canada Post Corporation has generated a heavy loss before tax of C$163 million (€118.64 million)in the third quarter ending October 1, 2011, down from a $19 million (€13.83 million) pre-tax loss
recorded in the same period a year earlier.The Group, which includes the Canada Post segment and Purolator, said the decline inprofitability was largely driven by an unfavourable ruling against Canada Post by the Supreme Courtof Canada leading to an estimate of the cost to the corporation being recorded in its third quarterfinancial statements. This resulted in a decrease in profitability with the final impact of thisruling still being evaluated.
In the third quarter, the Group also reported actuarial losses in the amount of $2.2 billion(€1.6 billion) on the re-measurement of its post-employment benefits. This was mainly due to thelower-than-expected returns from the assets of the Group’s pension plans during the quarter due toglobal market volatility and an increase in the employee benefit liabilities caused by a decreasein the discount rate.
Canada Post added that its total equity continues to be significantly affected by themeasurement of its post-employment benefit liabilities. “The financial health of the Corporation iscritical, as the key to a strong pension plan is a strong sponsor.”
For the first three quarters ended October 1, 2011, the Group reported a loss before tax of $159million (€115.74 million), down from a $62-million (€45.13 million) pre-tax profit recorded in thesame period a year earlier.
The Canada Post unit consisting of Transaction Mail, Parcel and Direct Marketing lost $190million before tax in the third quarter, down from a $49 million pre-tax loss recorded during thesame period in 2010. The performance was affected by the backlog of mail resulting from the labourdisruptions in June 2011. “Without this temporary boost to volumes and revenues, the performance inthe quarter would have been worse,” Canada Post explained.
For the first three quarters of the financial year, the Canada Post segment lost $211 millionbefore tax, down from a pre-tax profit of $7 million in the same period a year earlier. The weakeryear-on-year revenues and volumes in the first three quarters were driven by a cumulative estimatedrevenue loss of $173 million caused by the labour disruption, as well as increased costs largelydue to the Supreme Court of Canada ruling. This decline was partially offset by revenues from thefederal election, the census and pricing action.
For the 39-week period ended October 1, 2011, volumes in Transaction Mail business were down by2.6% equaling 111 million pieces, compared to the same period in 2010 as revenues decreased by $10million year-on-year. Parcels revenue declined by 5.6% in the first three quarters with volumesfalling 1.9%. Direct Marketing revenue increased by 0.8% while volumes decreased by 4% in the firstthree quarters.
The company’s Purolator courier and express business generated a $20 million profit before tax,down 20.7% from the $24 million pre-tax profit earned in the same period a year earlier. Revenuesincreased by $33 million equaling 8.7%, compared to the same period in 2010, mainly driven bypricing action and increased volumes. However, this was more than offset by a $37 million increasein the cost of operations, due to increases in volumes and inflationary pressures. The Purolatorsegment earned $38 million before tax in the first three quarters, down 17.6% from the same perioda year earlier.
For the upcoming Christmas period, Canada Post expects to deliver more than one billion cards,letters and parcels by the 24th December. It will employ 2,400 additional workers and deploy over1,330 trucks to help with the increased mail volumes, as well as schedule more planes and trucks tocarry greeting cards and parcels this holiday season.
“Our operation is geared to ensure that we meet our customers’ expectations,” said Cal Hart,Senior Vice President of Processing, Engineering and Infrastructure at Canada Post. “The only thingthat can slow us down is bad weather, but we’re ready for that too.”
