The core Canada Post segment, covering the mail & parcels businesses, has reported a loss before tax of C$31 million for the second quarter.
This was largely due to a sharp decline in Transaction Mail whose volumes 'fell faster in the first half of 2015 than in any first half since volumes peaked in 2006,' the Canadian postal utility said a statement.
The loss was also driven by higher employee benefit expenses, partially offset by continued strong growth in the Parcels business.
For the first two quarters of 2015, the Canada Post segment reported a loss before tax of C$7 million compared to a profit before tax of C$26 million for the same period in 2014.
The overall Canada Post Group, covering the ‘Canada Post’ mail and parcels business, express subsidiary Purolator and several smaller subsidiaries, reported a loss before tax of $4 million in the second quarter of 2015 compared to a profit before tax of C$86 million in the same period in 2014.
For the first two quarters of 2015, the Group of Companies recorded a profit before tax of C$18 million compared to a profit before tax of C$49 million in the same period in 2014.
Group revenues fell by 2.7% to C$1,578 million in the second quarter. For the first two quarters of 2015, Canada Post generated revenue of C$3,155 million, an increase of C$128 million on the first half of 2014.
Returning to the core Canada Post segment, Parcel volumes in the first half of 2015, increased by more than two million pieces or 6.5% in the second quarter while revenue increased by C$17 million or 4.8% to C$370 million.
Canada Post’s innovative solutions for e-tailers and consumers and reliable on-time delivery also continue to drive growth in Parcels revenue,'the postal utilty underlined in its statement.
Parcels revenue for the Canada Post segment increased by C$17 million or 4.8% to C$370 million in the second quarter and by C$56 million or 5.5% in the first two quarters, compared to the same period a year ago.
Domestic Parcels, the largest product category, generated sales of C$261 million in Q2, up 5.8% on the same period last year with volumes growing by by over two million pieces (+10.3%).
In the first two quarters of 2015, Parcels revenue increased by C$56 million (+5.5%) and volumes were up by almost almost seven million pieces (+6.5%) compared to the same period a year ago.
Domestic Parcels' revenue increased by C$41 million (+6.1%) and volumes increased by over six million pieces (+8.9%).
"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 on-line," the statement said.
Transaction Mail volumes (letters, bills and statements) fell by 102 million pieces or 7.2% compared to the first half of 2014.
"That rate of decline is higher than in the first six months of any year since mail volumes peaked in 2006, according to the statement.
"In the second quarter, volumes fell by 63 million pieces or 6.5% compared to the same period a year ago. The ongoing volume erosion reflects Canadians’ changing needs for postal service, and is the rationale for initiatives contained in the Five-point Action Plan that will achieve substantial operational savings."
Transaction Mail generates slightly more than half of the Canada Post segment’s revenue.
It fell by C$44 million or 5.4% in Q2 to $779 million compared to the same period in 2014.
In the first two quarters of 2015 it increased by C$68 million (+1.8%) compared to the same period a year ago.
Revenue from Domestic Lettermail, the largest product category of Transaction Mail, fell by $35 million (-4.7%) in the second quarter and rose by $72 million (+2.5%) in the first two quarters of 2015.
Canada Post Group's express subsidiary, Purolator, contributed a net profit of C$16 million in Q2 2015, a decrease of C$4 million (-18.1%) when compared to the same quarter last year. For the first two quarters of 2015, its net profit was up 4% to C$11 million.
Purolator generated revenue from operations of C$389 million in Q2 2015 – a decrease of C$38 million when compared to the same quarter last year. After the first two quarters, revenue totalled C$791 million – down C$22 million.
Canada Post said the decreases (in revenue) were due to a reduction in volumes.
