Canada Post recorded a loss before tax of $227 million in the third quarter of 2022 as parcel volumes fell compared to elevated levels a year earlier and economic uncertainty reduced business spending on marketing mail.
The decline in parcel volumes follows two years of unprecedented growth in online shopping in Canada. While online shopping activity is still above pre-pandemic levels, consumer demand has softened in 2022 due to the return of in-store shopping, the rising cost of living and economic uncertainty.
Rapid e-commerce growth has also increased the level of competition for parcel delivery. Canada Post continues to project growth for its parcel business.
For the third quarter ended October 1, 2022, the Canada Post segment’s loss improved from a loss before tax of $264 million in the same quarter of the prior year. Revenue was $8 million or 0.5 percent higher compared to a year earlier.
For the first three quarters of 2022, the segment recorded a loss before tax of $516 million, compared to a loss before tax of $492 million in the same period a year earlier. Revenue fell by $210 million, or 3.4 percent, compared to the first three quarters of 2021.
The cost of operations declined in the third quarter (by $26 million or 1.4 percent) and in the first three quarters of the year (by $187 million or 2.7 percent) compared to the same periods in 2021. An increase in discount rates resulted in lower pension and post-employment benefits, while parcel-volume declines drove lower labour costs.
In the third quarter of 2022, revenue for the parcels line of business increased by $22 million or 2.8 percent as volumes declined by 12 million pieces or 16.2 percent, compared to the same period in 2021. For the first three quarters of 2022, revenue declined by $150 million or 5.2 percent and volumes fell by 62 million pieces or 22.8 percent, compared to the same period of the prior year.
Volumes in 2022 declined from higher-than-normal volumes in 2021, especially in the first half of the year, when many stores remained closed to in-person shopping. Economic uncertainty also reduced demand for parcel delivery services in the second and third quarters of 2022.
Group of companies
The Canada Post Group of Companies – Canada Post and its three non-wholly owned subsidiaries, Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc. – recorded a loss before tax of $136 million in the third quarter, compared to a loss before tax of $191 million in the third quarter of 2021. In the first three quarters of 2022, the group of companies recorded a loss of $300 million before tax, compared to a loss before tax of $274 million in the same period of 2021.
Purolator and SCI recorded profits before tax of $84 million and $6 million, respectively, for the third quarter of 2022, and profits before tax of $203 million and $12 million, respectively, for the first three quarters of the year. These results partially offset Canada Post’s loss.