Highly competitive and demanding parcel delivery market continues to negatively impact results
Canada Post recorded a loss before tax of $315 million in the third quarter of 2024 as strong revenue growth in Direct Marketing did not make up for a decline in Parcels results.
An increasingly crowded and highly competitive ecommerce delivery market continued to impact Parcels results in the third quarter of 2024. While Transaction Mail volumes continued to erode, revenue rose due to a regulated stamp rate increase. Direct Marketing revenue and volumes experienced robust growth.
The Corporation’s $315-million loss before tax in the third quarter widened by $25 million compared to a loss before tax of $290 million in the third quarter of 2023. In the first nine months of 2024, Canada Post recorded a loss before tax of $345 million, compared to a loss before tax of $651 million in the same period of the prior year. The nine-month results improved compared to the previous year due to dividend income received from the divestitures of SCI Group Inc. (SCI) and Innovapost Inc. (Innovapost) in the first and second quarters, respectively, of 2024. Canada Post will record another significant loss in 2024, the seventh consecutive annual loss for the Corporation.
Canada Post’s revenue in the third quarter declined by $15 million, or 1.0 per cent, compared to the same period a year earlier. For the first nine months of 2024, revenue fell by $63 million, or 1.3 per cent, compared to the same period of the prior year.
In the third quarter and the first nine months of 2024, total cost of operations increased by 0.4 per cent and 1.4 per cent, respectively, compared to the same periods of 2023. The increase was mainly due to higher employee benefit costs driven by lower discount rates, which was partly offset by a decline in non-capital investments.
The Corporation recorded a loss from operations of $313 million in the third quarter, compared to a loss from operations of $291 million in the same quarter a year earlier. For the first nine months of 2024, Canada Post’s loss from operations was $803 million, compared to $662 million in the same period of the previous year. The loss from operations excludes any dividends or income from the divestitures.
Parcels
In the third quarter of 2024, Parcels revenue fell by $46 million, or 5.8 per cent, as volumes declined by 6 million pieces, or 9.6 per cent, compared to the same period of 2023. A highly competitive and demanding parcel delivery market continued to negatively affect results for the line of business. A decline in fuel surcharges tied to market rates also negatively affected Parcels revenue. Growth in ecommerce returns, as well as improved service performance in key markets, helped partially mitigate the volume and revenue decline.
For the first nine months of the year, Parcels revenue fell by $133 million, or 5.5 per cent, as volumes fell by 12 million pieces, or 6.0 per cent, compared to the same period of the prior year.
Transaction Mail
In the third quarter, Transaction Mail revenue increased by $7 million, or 1.3 per cent, as volumes declined by 33 million pieces, or 6.6 per cent, compared to the same period a year earlier. While Transaction Mail volumes continued to erode, revenue increased compared to the same quarter of 2023 due to a regulated postage rate increase that took effect on May 6, 2024. For the first nine months of 2024, Transaction Mail revenue was flat, as volumes fell by 63 million pieces, or 3.7 per cent, compared to the same period of 2023.
Direct Marketing
In the third quarter, Direct Marketing revenue rose by $21 million, or 9.0 per cent, as volumes increased by 201 million pieces, or 22.1 per cent, compared to the same period of the previous year. For the first nine months of 2024, revenue increased by $63 million, or 9.1 per cent, as volumes rose by 556 million pieces, or 19.7 per cent, compared to the same period of 2023. New business and higher sales for the Canada Post Neighbourhood Mail™ service positively impacted results. However, digital alternatives continued to negatively impact sales of other Direct Marketing products.
Group of Companies
The Canada Post Group of Companies recorded a loss before tax of $252 million in the third quarter, compared to a loss before tax of $217 million in the same period a year earlier. Purolator Holdings Ltd. recorded a profit before tax of $62 million in the quarter, compared to a profit before tax of $68 million in the same period of 2023.
For the first nine months of 2024, the Group of Companies recorded a loss before tax of $281 million, compared to a loss before tax of $442 million in the same period of 2023. Purolator recorded a profit before tax of $182 million in the first three quarters of 2024, compared to a profit before tax of $201 million in the same period of the prior year. Proceeds from the divestitures of SCI and Innovapost helped improve the nine-month results for the Group of Companies compared to the prior year period.
In the first half of 2024, Canada Post and Purolator divested 100 per cent of the shares of two subsidiaries: SCI, a leading Canadian third-party logistics provider, and Innovapost, the Group’s shared-services provider in information technology (IT).
Canada Post is transforming its IT model to focus its business on its core mandate of providing a modern postal service to Canadians.