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Ecommerce Helps Canada Post Remain Profitable

Ecommerce helped Canada Post remain profitable in 2016 thanks to strong growth in the Parcels line of business aided by partnerships with retailers. The before-tax profit of $55 million compares to a before-tax profit of $63 million in 2015 – it issued the following press release:

Canada Post’s commitment to help Canadian businesses grow through e-commerce led to strong growth in the Parcels line of business in 2016. By partnering with retailers to deliver innovative and convenient delivery, shipping and returns experiences to Canadians, the Canada Post segment solidified its position as Canada’s No. 1 parcel company. The Canada Post segment’s profit before tax of $55 million compares to a profit before tax of $63 million in 2015.

The year-end results were a positive sign considering the significant challenges facing the company. With declining mail volumes, less than half of the segment’s revenue in 2016 was generated by Transaction Mail, or letters, bills and statements. In addition to that issue, the Corporation is faced with the challenges of significant pension obligations, labour costs and the need to invest in network capacity to keep up with growing parcel volumes.

Parcels revenue has grown $521 million since 2011, reflecting the tremendous impact of Canada Post identifying e-commerce as the anchor of its growth strategy.

The Canada Post segment delivered one million parcels on 34 separate days in 2016. It had first reached the one-million-parcels-a-day milestone in 2012, when it occurred twice. On December 5, 2016, the Corporation delivered 1.52 million parcels, an all-time one-day record. The Corporation is also the only delivery company to deliver across Canada to all addresses, which surpassed the 16 million mark in 2016.

Parcels results 
In 2016, Parcels revenue from the Canada Post segment increased by $92 million or 5.6 per cent compared to 2015. At 195 million, volumes increased by 14 million pieces or 7.7 per cent compared to 2015. Domestic Parcels volumes grew by 11 million pieces or 9.0 per cent compared to 2015. Inbound Parcels volumes – from the U.S. and the rest of the world – increased by 8.4 per cent compared to 2015, driven particularly by strong growth from Asia Pacific countries.

Parcels continue to generate an increasing proportion of Canada Post’s revenue. Parcels generated 28 per cent of the segment’s revenue in 2016; by comparison, Parcels generated 26 per cent of revenue in 2015 and only 21 per cent in 2011.

Transaction Mail results
Volumes in Transaction Mail, the Canada Post segment’s largest line of business, continued their decade-long decline in 2016. Volumes fell by 286 million pieces or 7.8 per cent compared to 2015. Revenue fell by $153 million or 4.8 per cent compared to 2015. At $3.0 billion in 2016, Transaction Mail generated 49 per cent of the Canada Post segment’s operating revenue of $6.2 billion. In 2011, Transaction Mail had generated 53 per cent of the segment’s revenue.

Canadians mailed 1.8 billion fewer pieces of Domestic Lettermail or 37 per cent less in 2016 than they did in 2006, the year that mail volumes reached their historic peak.

Direct Marketing results
In 2016, Direct Marketing revenue fell by $67 million or 5.6 per cent to $1.14 billion, and volumes decreased by 261 million pieces or 5.3 per cent compared to 2015. In another sign of the ongoing disruption of a paper-based industry by digital technology, Publications Mail volumes fell 9.6 per cent in 2016, as mailed subscriptions of magazines and similar material continued to decline.

Group of Companies
In 2016, for a third consecutive year, the Canada Post Group of Companies reported a profit before tax. The profit before tax of $114 million in 2016 is a decrease of $22 million compared to the profit before tax of $136 million in 2015. Purolator’s profit before tax of $67 million in 2016 was $11 million higher than its 2015 profit before tax of $56 million.

To read the full report in PDF, visit canadapost.ca/aboutus and select “Financial Reports” from the Corporate menu.

Background: The operations of the Canada Post Group of Companies are funded by the revenue generated by the sale of its products and services, not taxpayer dollars. The Canada Post Group of Companies consists of the core Canada Post segment and its three non-wholly owned subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.

Source: Canada Post Press Release

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.