Canada Post recorded a loss before tax of CAD*779m in 2020, even while delivering record-high Domestic Parcels volumes. The postal service had reported a year-to-date CAD709m loss before tax in the third quarter of 2020. Costs related to COVID-19 are estimated at CAD292m. A significant portion of this was due to special leaves put in place to support employees. The company also incurred additional collection, processing, and delivery costs due to increasing parcel volumes. There were also other factors apart from COVID-19’s impact. For one, it costs significantly more to process and deliver parcels than it does letters. Canada Post also incurred an additional CAD127m in costs stemming from the June 2020 arbitrator’s ruling, resulting in new collective agreements with the Canadian Union of Postal Workers.
Significant revenue declines of CAD230m in Transaction Mail, compared to 2019, occurred as marketers cancelled or delayed mailings due to COVID-19 and mailers increasingly turned to digital alternatives. It is estimated that CAD382m of that CAD487m decline in Transaction Mail and Direct Marketing revenue is due to COVID-19. The net negative impact of COVID-19 was CAD194m when factoring in the growth of Parcels revenue.
Canada Post’s Parcels business experienced record growth in 2020 as Canadians shopped online far more often during COVID-19. With Canadians’ accelerated adoption of online shopping, Canada Post set several records, including most parcels delivered on a single day (2.4m on December 21, 2020) and the most consecutive days of delivering 1m or more parcels (181 consecutive delivery days from mid-April to the end of the year). Total Parcels revenue grew by CAD699m, or 25.0%, compared to 2019. It is estimated that CAD471m of that increase is due to COVID-19. Total volumes grew by 69m pieces or 21.0% in 2020, compared to 2019. Domestic Parcels revenue increased by CAD613m or 29.1%, while Domestic volumes increased by 70m pieces or 30.9%, compared to 2019. Inbound Parcels volumes declined slightly, in part due to fewer flights from Europe and China during COVID-19.
Transaction Mail is mostly letters, bills and statements. Ongoing revenue and volume declines accelerated as businesses and Canadians used digital alternatives even more during COVID-19. In 2020, Transaction Mail volumes fell by 286m pieces or 10.5% and revenue fell by CAD230m or 8.9%, compared to 2019. Of that decline, CAD146m is estimated to be due to accelerated volume erosion due to COVID-19.
The Canada Post Group of Companies reported a loss before tax of CAD626m in 2020, compared to a loss before tax of CAD23m in 2019. An estimated CAD174m of this loss is due to the impact of COVID-19. The Group of Companies’ 2020 results are due to a loss in the Canada Post segment, which was partially offset by Purolator’s profit. The Purolator segment recorded a profit before tax of CAD176m in 2020, compared to a profit before tax of CAD152m in 2019, an increase of 15.4%.
Source: Canada Post
*CAD=$0.77/€0.64
