The Canada Post segment of Canada Post Group of Companies reported a profit before tax of $194 million in 2014 compared to a loss before tax of $125 million in 2013. Results exclude Canada Post’s three non-wholly owned principal subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.
The results were mainly due to three factors that were consistent throughout much of the year – strong growth in the Parcels business, lower employee benefit costs and new pricing measures for Transaction Mail.
Parcels results
With the increasing popularity of online shopping, the Corporation’s role as an essential enabler of e-commerce grew even stronger in 2014. Parcels revenue from the Canada Post segment’s top 25 e-commerce customers rose by almost 30 per cent in 2014 compared to 2013.
In 2014, the Canada Post segment’s revenue from Domestic Parcels, the largest Parcels product category, surpassed $1 billion for the first time, rising by $85 million compared to 2013. Total Parcels revenue for the Canada Post segment increased by $120 million to more than $1.5 billion and volumes increased by seven million pieces compared to 2013, thanks in part to a very successful holiday season.
Transaction Mail results
The greatest challenge to Canada Post’s financial sustainability is the continuing decline of Lettermail. In 2014, volumes of Transaction Mail, which includes mostly letters, bills and statements, fell by a further 5.2 per cent or 214 million pieces, compared to 2013. Compared to 2006, Domestic Lettermail volumes fell by 1.4 billion pieces, or 28 per cent.
The tiered pricing structure contained in the Five-point Action Plan, introduced at the start of the second quarter, helped to offset the impact of this steep and continuing volume decline. As a result, Transaction Mail revenue rose by $238 million or 8 per cent compared to 2013.
Direct Marketing results
In 2014, Direct Marketing contributed more than $1.2 billion in revenue to the Canada Post segment. Direct Marketing revenue in 2014 for the Canada Post segment fell by $37 million or 3 per cent and volumes decreased by 112 million pieces or 2.2 per cent compared to 2013.
Employee benefit costs
The Canada Post segment’s 2014 results were also helped by a $181 million non-cash reduction in employee benefit costs compared to 2013. This is a result of strong pension asset returns in 2013 and an increase in the discount rates used to calculate benefit plan costs in 2014. Pension costs remain highly volatile and are expected to increase in 2015.
The Canada Post Group of Companies reported a profit before tax of $269 million in 2014 compared to a loss of $58 million in 2013.