Canada Post reports $315-million loss as parcels business declines

Canada Post posted a $315-million loss before tax in the third quarter of 2024, widening its losses compared to the same period in 2023. Strong revenue growth in direct marketing failed to offset declining results in its parcels business, which faced stiff competition in the e-commerce delivery market.

For the first nine months of 2024, Canada Post recorded a $345-million loss before tax, an improvement from the $651-million loss in the same period of 2023. This was largely due to income from divesting its interests in SCI Group Inc. and Innovapost Inc. earlier this year. Despite these gains, 2024 is on track to be the corporation’s seventh consecutive year of significant losses.

Revenue and costs

Canada Post’s revenue declined by 1 per cent in the third quarter, falling $15 million compared to the same period in 2023. Year-to-date, revenue dropped $63 million, or 1.3 per cent. Operational costs increased by 0.4 per cent in the quarter and 1.4 per cent for the first nine months of the year, mainly due to higher employee benefit costs stemming from lower discount rates.

The corporation’s operating losses totalled $313 million for the quarter, compared to $291 million in the same period of 2023. Year-to-date operating losses reached $803 million, up from $662 million in 2023.

Parcels struggles

Parcels revenue dropped by $46 million, or 5.8 per cent, in the third quarter, as volumes fell by 9.6 per cent (six million pieces). Year-to-date, parcels revenue fell by $133 million, or 5.5 per cent, with a 6 per cent decline in volume.

The competitive e-commerce delivery landscape and lower fuel surcharges contributed to the decline, though improved service performance and growth in returns helped partially mitigate losses.

Transaction mail trends

Transaction mail volumes continued their long-term decline, dropping by 6.6 per cent (33 million pieces) in the third quarter. However, a regulated postage rate increase in May boosted revenue by 1.3 per cent, or $7 million. For the first nine months of 2024, revenue was flat despite a 3.7 per cent (63 million pieces) decline in volume.

Direct marketing gains

Direct marketing emerged as a bright spot, with third-quarter revenue rising 9 per cent ($21 million) on a 22.1 per cent increase in volumes (201 million pieces). Year-to-date, revenue grew by $63 million, or 9.1 per cent, with volumes up nearly 20 per cent. Gains were driven by higher sales of Neighbourhood Mail and new business, though digital alternatives continued to impact other direct marketing products.

Group performance

The Canada Post Group of Companies, which includes Purolator, recorded a $252-million loss before tax in the third quarter, compared to $217 million in 2023. Year-to-date, the Group’s losses stood at $281 million, down from $442 million a year earlier, reflecting proceeds from the divestitures.

Purolator reported a profit before tax of $62 million for the quarter, down from $68 million in 2023, and $182 million for the first nine months, compared to $201 million the previous year.

Transformation efforts

Canada Post divested its holdings in SCI, a third-party logistics provider, and Innovapost, its IT shared-services arm, in the first half of 2024. The moves align with its strategy to focus on its core postal service mandate while modernizing its IT operations.

As the corporation continues to face challenges in its parcels business and broader market pressures, its financial struggles highlight the need for continued transformation to meet the demands of a changing postal landscape.

In a statement on Canada Post’s Q3 financials, the Canadian Union of Postal Workers said: “Canada Post is a public service, not a profit-driven corporation, even though it operated profitably for many years. Postal workers deliver to every address in the country, including where competitors won’t go because they can’t make a profit.

“The reported losses published over the last few years don’t tell the whole story. Canada Post has spent hundreds of millions of dollars to grow its parcel business, yet overall labour costs have decreased during the last few years.”