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Canada Post blames losses on shift to digital communications

As mail volumes continue to erode, the Canada Post segment of the Canada Post Group of Companies reported an operating loss of $269 million for 2013. Transaction mail volumes have fallen 30% per address since they began to decline in 2007.

As mail volumes continue to erode, the Canada Post segment of the Canada Post Group of Companies reported an operating loss of $269 million for 2013. Transaction mail volumes have fallen 30% per address since they began to decline in 2007.

The Canada Post Group of Companies, which consists of the core Canada Post segment and its three non-wholly owned principal subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc., reported an operating loss of $193 million for 2013. These operating losses were reduced by gains, mostly from the sale of corporate real estate.

The company says these losses are driven by the historic shift from paper to digital communications. The shift reduces Canada Post’s revenue from transaction mail, while its cost base remains largely fixed.

Transaction mail, which is mostly letters, bills and statements, generates 50% of the Canada Post segment’s revenue. As mailers continue to shift to digital alternatives, transaction mail volumes fell by 230 million pieces or 5.3% compared to 2012. Reflecting intense competition, direct marketing revenues were down by 2.8% and volumes were down by 1.5% compared to 2012.

Canada Post is a key enabler of e-commerce. Parcel revenues increased by $93 million or 7.2% compared to 2012, and volumes increased by 5 million pieces or 2.8% compared to 2012. The company states that continuing to succeed in the parcel business will be crucial to the success of the Canada Post Group of Companies.