Canada Post sees $13M profit in 3rd quarter of 2014

Canada Post is citing pensions, parcels and changes announced last year as reasons for both a third-quarter profit and expectations to end 2014 in the black.

Postal service cites higher postage price, more parcels for positive results

Canada Post on Wednesday announced its second straight profitable quarter after not finishing in the black since 2010, citing factors such as higher costs for Canadians to send mail, and a consolidation of services due to the scaling back of home deliveries. (Chris Wattie/Reuters)
  Canada Post is citing pensions, parcels and changes announced last year as reasons for both a third-quarter profit and expectations to end 2014 in the black.

The corporation said Wednesday it posted a pre-tax $13-million profit in 2014's third quarter, which is $142 million more than the same quarter a year ago, for a pre-tax total of $39 million in profits through the first nine months of this year.

It posted a pre-tax, $53 million profit in 2014's second quarter, the first profitable quarter since 2010.

  While the amount of so-called "transaction" mail (which includes letters, bills and statements) continues to fall, Canada Post said increasing the price of sending these kinds of mail has played a big part in growing transaction mail revenue over the last year.

"Largely as a result of the Lettermail price adjustment put in place in the second quarter, revenue from Transaction Mail … rose by 13.7 per cent to $750 million in the third quarter compared to the same period in 2013," Canada Post said in the release.

  "Revenue for the first three quarters rose by 6.5 per cent to approximately $2.4 billion compared to the same period last year."

Almost three million more parcels went through Canada Post in the 2014 third quarter than in the same 2013 quarter, leading an 8.2 per cent growth in parcel-related revenue to $337 million.

  Overall, Canada Post said it has made more than a billion dollars more revenue from sending more than four million more parcels in the first three quarters of 2014 compared to 2013.

Canada Post also said "highly volatile" employee benefit costs went in its favour last quarter, as costs decreased by $48 million — a total of $161-million less in 2014 than the first three quarters of 2013.

  It said "strong pension asset returns" last year and an increase in the discount rates used to calculate benefit plan costs this year are factors in those decreases.

Revenue from direct marketing mailouts dropped by $15 million in the third quarter this year compared to last, when it was $294 million.

  Sixty-five million fewer pieces of direct marketing mail were sent out this third quarter compared to the last quarter.

800,000 homes switching to community mailbox

  Canada Post is  in the midst of a major restructuring announced in December 2013 that includes the end of door-to-door delivery in favour of community mailboxes and an increase in the cost of postage.

On Wednesday, the corporation said about 100,000 homes have been switched to community mailboxes, about 700,000 are in the process of doing so and another 200,000 or so will be notified next month.

  It also said "consolidating processing operations" because of the steady decline in transaction mail volumes — 175 million fewer pieces of mail in the first three quarters of 2014 compared to the same time frame in 2013 — is leading to savings.

As part of those operations, mail is being moved from plants in cities such as Ottawa, Hamilton and London to Montreal and Toronto, as well as from Saint John to Halifax.

Canada Post said it spent $13 million less on labour in 2014's third quarter than in the same 2013 quarter, because of "streamlining and modernization."

The decline in mail volumes in the 2014 third quarter comes after a second quarter during which it slowed somewhat unexpectedly, which Canada Post said could have been related to mail from two provincial elections.

  When announcing its new plans nearly a year ago, Canada Post said it would eliminate 6,000 to 8,000 positions between then and the end of 2018, but 15,000 employees were expected to leave the company or retire in those five years.

Union: profits show motivation behind cuts

The Canadian Union of Postal Workers is challenging the end of urban door-to-door mail delivery in Federal Court, saying it violates Section 15 of the Charter of Rights and Freedoms by taking away rights from people with disabilities, and that the move didn't get the parliamentary approval required.

It issued a news release Wednesday afternoon saying the profits prove Canada Post doesn't need to end door-to-door delivery.

"At this point, it's obvious that these cuts are based on attacking public services, rather than the facts," said union national president Denis Lemelin in the release.

"Our post office has been profitable for the vast majority of the last 20 years and continues to be profitable. We need to stay headed in the right direction, not cut back on a good service."

The union said the corporation had projected a loss of $274 million in 2014, so the profits show their forecasts can't be trusted.