Canada Post reports lower Q3 pre-tax loss; may need Ottawa’s help in 2014
OTTAWA, ONT. (CP) — Canada Post is facing major financial difficulties and will likely be asking Ottawa for financial relief next year, the federal Crown corporation said Thursday.
The company, collectively the Canada Post Group, made the comment in releasing its thirdquarter results, which included an improved but still big pre-tax loss of $109 million for the period ended Sept. 28.
The group, which includes the Canada Post mail and parcel delivery segment, along with majorityowned subsidiaries Purolator, SCI Group and Innovapost, says options under consideration include asking the federal government for additional pension regulatory relief and new financing for 2014.
Canada Post Group said its net loss was $73 million for the quarter, $30 million less than the $103million net loss it suffered in the prior-year period.
Revenue from operations rose seven per cent to $1.752 billion from $1.745 billion. Of that, the Canada Post segment contributed $1.343 billion.
For the first three quarters, the group’s net loss was $88 million, compared with $219 million in the 2012 period. The improvement was primarily due to a gain of $109 million on the sale in January of the company’s Vancouver mail processing plant.
The Canada Post segment had a pre-tax loss of $129 million in the latest quarter, improved from a deeper $161 million loss in the comparable period in 2012. It said a 7.3-per-cent decline in transaction mail volumes outweighed solid growth in both revenue and volumes in its parcels business.
Transaction mail, which includes letter, bills, statements and the like, generates about 50 per cent of that segment’s revenue.
Elsewhere, Canada Post said its Purolator business posted a pretax quarterly profit of $16 million, up $1 million; the logistics business posted a $3-million profit, up from $1 million, and Innovapost contributed a pre-tax profit of $1 million, versus nil a year ago.
The company said its operating losses have from a number of factors, including mail volume erosion as a results of electronic substitution, bill consolidation and intense competition.
It also cited “largely fixed operating costs required to meet its service mandate to a growing number of addresses despite volume declines.”
Meanwhile, Canada Post said expects to reach the maximum legislated relief from special payments to reduce the $5.9-billion solvency deficit in its pension plan early next year.
In resuming its special payments, the Canada Post segment will have to contribute an estimated $1 billion on top of current service contributions in 2014 alone, it said.
Based on current financial projections, Canada Post believes it will require additional liquidity by mid-2014 and is exploring with its options with the government.