Canada Post reports $264m loss before tax in Q3 2021

Canada Post has adopted a science-based target to reduce its scope 1 and scope 2 greenhouse gas emissions by 30% by 2030, an initial target that will set it on a path to achieve net-zero emissions by 2050.

Canada Post has reported its Q3 2021 earnings, recording a loss before tax of $264m, a slight improvement compared to the same period a year earlier. When looking at the first three quarters of 2021, Canada Post recorded a loss before tax of $492m, an improvement of $217m or 30.5% year-on-year (y-o-y).

While H1 2021 showed strong revenues growth from all lines of business, it slowed slightly in Q3 2021 as consumers returned to shop in store. Revenue gains in Transaction Mail due to the federal election and some recovery in Direct Marketing partially offset a decline in Parcels revenues.

Revenues for the Canada Post segment increased by $37m, or 0.8% y-o-y, in Q3 2021. For the first three quarters of 2021, revenues increased by $501m, or 8.5% y-o-y, due to increases in all lines of business. According to the company, comparisons are affected by the impacts of COVID-19 on volumes and revenue, which began at the end of Q1 2020 and affected the lines of business differently.

In Q3 2021, cost of operations increased by $32m, or 1.8% y-oy, and by $275m, or 3.3% y-o-y, when looking at the three quarters of 2021. These increases were driven by annual wage increases and higher costs of processing and delivering parcels compared to mail. The Corporation also invested in operations and capacity, as it said that the pandemic had put pressure on the company to grow the business and better meet these evolving needs, pushing it to improve customer experience and innovate its operations.

Parcels

Parcels revenues declined by $31m, or 5.3%, as volumes fell by 20m pieces, or 22.1% y-o-y. The reopening of stores for in-person shopping negatively impacted demand for parcels. Global supply chain issues also began to affect inbound volumes, particularly from China. For the first nine months of the year, revenue rose by $307m, or 11.4%, as volumes declined by 2m, or 2.3% y-o-y. Year-to-date Parcels revenue was positively affected by more proactively managing available capacity and the mix of commercial customers and products. Investments have also been made to improve processing capacity and efficiencies to support growth in the Parcels business.

Transaction Mail

Transaction Mail revenues grew by $21m, or 2.4% y-o-y, as volumes rose by 8m pieces. This was partly due to federal election mailings. For the first three quarters of 2021, revenue grew by $54m, or 1.3%, as volumes rose by 4m pieces compared to the same period a year earlier, due in part to the census and federal election mailings. Despite this, continued erosion in Transaction Mail persists as consumers and mailers migrate to digital alternatives.

Direct Marketing

Direct Marketing continued to partially recover in the Q3 2021, following significant declines in Personalized Mail and Neighbourhood Mail products in 2020 as customers postponed or cancelled marketing campaigns due to COVID-19 and supply chain issues started globally. Direct Marketing revenues grew by 20.3%, in Q3 2021 as volumes rose by 21.1% y-o-y. While Direct Marketing results improved, some retailers delayed or cancelled marketing campaigns during the quarter. For the first three quarters of 2021, Direct Marketing revenue increased by 15.9%, as volumes increased by 19.8% y-o-y.

Purolator and SCI group

Purolator’s and SCI’s profits before tax of $65m and $7m, respectively, helped offset the Canada Post segment’s loss before tax. For the first three quarters of the year, the Group of Companies recorded a loss before tax of $274m, an improvement of $328m from the same period in 2020 ($602m loss).

Source: Canada Post

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