NZ Post has reported an increase in revenue and a record-breaking 12 months for its parcels business but a write-down on mail assets resulted in a net loss for the 2018/19 financial year.
“This operational performance shows that the strategy to focus on parcels is the right one, as our parcels business continues to grow. We will continue to look to invest for the future, to meet the opportunities from eCommerce,” commented the postal operator's board chair, Rodger Finlay. “We also continue to recalibrate for low numbers of letters being sent and the impact this has on our bottom line.”
NZ Post incurred a net loss after tax of NZ$121 million for the year ended 30 June 2019 compared to a profit of NZ$13 million in 2017/18. Adjustments to take into account include a NZ$51 million write down on mail assets.
However, on the positive side, the group highlighted a NZ$35 million increase in revenue on the previous financial year to NZ$912 million while there was a NZ$32 million improvement in underlying operating profit which totalled NZ$17 million, compared to an operating loss of NZ$15 million in in 2017/18.
Focusing on the strong performance of NZ Post's parcel business, CEO David Walsh said: “NZ Post delivered over 78 million parcels this financial year, which is predicted to continue growing year-on-year.
“1.8 million New Zealanders shopped online in 2018, spending a total of NZ$4.2 billion. A significant proportion of this spending is on items that require delivery as parcels. NZ Post completes well over half of these deliveries.”
He continued: “NZ Post is primed to continue maximising the growth and opportunities that eCommerce brings, especially in the fast-growing business-to-consumer market where NZ Post has the largest share.
“It was a record Christmas too, with over 14.5 million parcels delivered during November and December. That’s an average of almost three parcels a second. We will be investing significantly in our parcel network over the next three years to continue to meet this growth.”
However, Walsh said the bottom line for the 2018/2019 financial year was impacted by one-off costs to bring NZ Post in line with the Holidays Act 2003, a write down on mail assets, and a write down of a deferred tax asset.
“Each year the value of our assets is reviewed as part of our financial reporting obligations. NZ Post is proud to continue to deliver a national mail service up and down the country, however because the commercial returns on that service no longer support the value of those assets, we are now reducing the ‘paper’ value of our mail assets by NZ$51 million.”
Walsh noted that 10 years ago, one billion letters each year were sent through the NZ Post's network. “In the past 12 months we delivered just 380 million letters, and an unquantifiable reduction is set to continue. This won’t be a surprise for New Zealanders. Around the world, people have been sending fewer letters for many years now.”
In the 2018/19 financial year, NZ Post handled 65.8 million fewer letters than during the previous 12 months. Even so, mail continues to be valued by New Zealanders who currently use letters for a range of important functions, such as local government elections and medical appointments.
“NZ Post’s business strategy includes operating a sustainable mail service and we will be taking a methodical and planned approach to this. We are keeping our shareholder fully informed and we appreciate their high level of engagement,” board chair Finlay remarked.
“Our challenge is to juggle the cost of delivering mail and the reduction in the number of letters being sent, with the high value that New Zealanders place on the mail service. Providing a physical mail service for New Zealanders that meets the needs of both rural and urban New Zealand is part of NZ Post’s DNA – but it must be financially sustainable on its own,” he concluded.
