Canada Post recorded a loss before tax of $265m in the third quarter of 2020, as declines in Transaction Mail and Direct Marketing revenue and higher costs had a significant impact on earnings. Parcels revenue continued to grow in the quarter, but it was not enough to offset these contributing factors.
With Canadians shopping online more during COVID-19, the Parcels business continued to grow strongly in the third quarter. However, the postal service incurred significantly higher costs related to providing an essential service during COVID-19, including special leaves and additional collection, processing and delivery costs. Canada Post also continues to incur added costs stemming from the June 2020 arbitrator’s ruling that resulted in new collective agreements with the Canadian Union of Postal Workers (CUPW).
For the nine months, which ended September 26, 2020, the Canada Post segment recorded a loss before tax of $709m on revenue of $4.9bn. That compares to a loss before tax of $162m, on revenue of $4.8bn, for the first three quarters of 2019. Canada Post estimates that COVID-19 had a net negative impact of $188m on its before-tax results for the first three quarters of 2020. The segment would have still incurred a loss without the impact of COVID-19 and the new collective agreements with CUPW.
Canada Post’s Parcels business continued to be strong as Canadians shopped online more often during COVID-19, even as physical stores reopened in the third quarter. Parcels revenue grew by $186m, or 30%, in the third quarter and by $465m, or 25.5%, for the first three quarters of 2020, compared to the same periods in 2019. Volumes grew by 22m pieces or 31.1% in the third quarter, and by 52m pieces or 24.5% in the first three quarters, compared to the same periods in 2019.
Transaction Mail is mostly letters, bills and statements. Ongoing revenue and volume declines accelerated as businesses and Canadians used digital alternatives even more during COVID-19. In the third quarter, Transaction Mail volumes fell by 72m pieces or 11.5% and revenue decreased by $52m or 8.8%, compared to the same period in 2019. Over the first three quarters of 2020, Transaction Mail volumes fell by 204m pieces or 9.2%, and revenue fell by $172m or 8.1%, compared to the first three quarters of 2019.
Customers continued to delay or cancel marketing campaigns due to COVID-19 during the quarter, adding to the impact of ongoing digital substitution. Direct Marketing revenue declined by $60m or 24.1% in the third quarter and by $212m or 26.9% for the first three quarters of 2020, compared to the prior year. Volumes fell by 269m pieces or 25.3% in the third quarter and by 1bn pieces or 31.0% in the first three quarters, compared to the same period last year.
The Purolator segment recorded a profit before tax of $42m in the third quarter of 2020, an increase of $1m compared to the same period last year. For the first three quarters of 2020, Purolator recorded a profit before tax of $91m, a decrease of $14m compared to the same period last year.
Source: Canada Post