Post Office Workers Union urges Ottawa to expand into financial services
It was 2017 when Canada Post last delivered a profit, which as a Crown Corporation delivered a return for taxpayers. Last week it reported another quarterly loss.
With a net loss of $76 million before tax in the first quarter of 2024, as revenue for transactional mail and parcels declined while its direct marketing business gained, the postal service’s long-term financial and business challenges show no sign of abating.
The loss would have been far higher without the divestment of logistics provider SPI Group, which was sold to Montréal-based Metro Supply Chain Inc. Without this, the net loss in the first quarter would have been $224 million, more than double that of the same period one year earlier ($107 million).
In the first quarter, Canada Post's revenue declined by $56 million, or 1.5%, as transactional mail demand continued to decline – it delivered 16 million fewer items compared to Q1 2023 - and the parcels line of business faced increased competition and delivered 2 million fewer than the same period of 2023.
Better news came from the Direct Marketing line which recorded a rise in revenue of $23 million, or 12%, as volumes increased by 180 million pieces.
Financial services
The Canada Post Group of Companies also includes shipping, freight, and courier services firm Purolator, and until last month the group's shared-services IT provider Innovapost Inc., which was divested with financial details to be included in the second quarter results.
The divestiture of SCI contributed a gain on sale of $287 million to the Group of Companies' results in the first quarter of 2024, so the overall group recorded a profit before tax of $106 million in the first quarter, compared to a loss before tax of $58 million in the same period a year earlier. Purolator recorded a profit before tax of $39 million in the quarter, compared to $46 million in the same period of 2023.
In 2023 Canada Post reported a full-year net loss of $748 million, prompting stark statements from its management, the federal government, and the union representing postal workers.
“Canadians understand our business model must change,” Doug Ettinger, president and CEO of Canada Post said earlier this month, responding to the 2023 results. “An operating model designed to deliver nearly 5.5 billion letters in 2006 cannot be sustained on the 2.2 billion letters we delivered last year. This trend is not unique to Canada.”
Jean-Yves Duclos, the Canadian government’s minister of Public Services and Procurement, added that the government and Canada Post are working together on a plan to put the firm on a long-term financially stable footing.
The national president of the Canadian Union of Postal Workers, Jan Simpson, said that the financial self-sufficiency of Canada Post should come from growth and innovation, not cuts.
“If Canada Post can introduce financial services, other expanded services, and recapture market share in parcel delivery, there is a future with decent jobs for all of us,” she said.
In 2021, Canada Post and TD teamed up to pilot certain financial services offerings, followed by the launch of the MyMoney Loan designed to offer small loans to people in rural areas with limited access to banking services. However, this was scrapped last spring after less than a year.
