Canada Post reports difficult Q2

Canada Post has announced its financial results for Q2 2015. It reported revenue of C$1.95bn, representing a decline of 2.99% year-on-year. The company also recorded a Q2 operating profit of C$4m, a fall of 95.83% compared to Q2 2014. Accordingly Canada Post’s margin stood at 0.02%.

The company attributed the decline in revenue to the erosion of volumes in letter mail at Canada Post. This could not be fully offset by growth in the parcels business, productivity improvements, domestic letter mail rate action and three extra business days year-on-year. In the second quarter transaction mail volumes fell by 63m pieces or 6.5% compared to the same period 2014. The ongoing volume erosion reflects Canadians’ changing needs for postal services.

The Canada Post Group stated that the decline in operating profit was primarily driven by the Canada Post segment. The poor result of this segment was also compounded by three additional business days which raised operating costs.

Profits were also hampered by volatility in employee benefit expenses. The cost of employee benefits for the Canada Post segment rose by $59m in the second quarter and by $129m in the first two quarters year-on-year. This is the result of a decrease in the discount rates used to calculate benefit plan costs in 2015, partially offset by strong pension returns in 2014. Employee benefit expenses are expected to remain higher throughout 2015 when compared to 2014.