NZ Post has reported an after-tax loss of $121 million, blaming a continuing decline in letter volumes.
Despite reporting a “strong operational performance” with a $35 million increase in revenue, the postal service’s bottom line was hit hard by a $51m write-down in the value of its mail assets.
The lift in revenue was driven by an increase in online shopping leading to a rise in the volume of parcels NZ Post delivered.
“This operational performance shows that the strategy to focus on parcels is the right one, as our parcels business continues to grow,” said Rodger Finlay, NZ Post Board chairman.
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The $121m loss compared to a $13m profit last year.
“We will continue to look to invest for the future, to meet the opportunities from eCommerce,” Finlay said.
“We also continue to recalibrate for low numbers of letters being sent and the impact this has on our bottom line.”
There were 65.8 million fewer letters sent in the 12 months to the end of June, compared to the same period last year, but Finlay said: “NZ Post delivered over 78 million parcels this financial year, which is predicted to continue growing year-on-year.
“1.8 million New Zealanders shopped online in 2018, spending a total of $4.2 billion. A significant proportion of this spending is on items that require delivery as parcels. NZ Post completes well over half of these deliveries.”
Chief executive David Walsh said NZ Post expected continued parcel growth.
“It was a record Christmas too, with over 14.5 million parcels delivered during November and December. That’s an average of almost three parcels a second. We will be investing significantly in our parcel network over the next three years to continue to meet this growth.”
“Each year the value of our assets is reviewed as part of our financial reporting obligations,” he said.
“NZ Post is proud to continue to deliver a national mail service up and down the country, however because the commercial returns on that service no longer support the value of those assets, we are now reducing the ‘paper’ value of our mail assets by $51 million.”
“Ten years ago, one billion letters each year were sent through our network – in the past 12 months we delivered just 380 million letters, and an unquantifiable reduction is set to continue,” said Walsh.
But mail remained important to New Zealand society, including facilitating elections.
“NZ Post’s business strategy includes operating a sustainable mail service and we will be taking a methodical and planned approach to this. We are keeping our shareholder fully informed and we appreciate their high level of engagement,” Walsh said.