📦💵 Canada Post Segment Reports $548-million Loss Before Tax for 2022
Tuesday, 09 May 2023 04:20.PM
- Increased competition in the parcel delivery market impacted volumes and revenue -
Canada Post recorded a loss before tax of $548 million in 2022, as growing competition in the parcel delivery sector, combined with economic uncertainty and reduced consumer spending, negatively affected parcel volumes and revenue.
The Corporation's 2022 loss before tax widened by $58 million from a loss before tax of $490 million in 2021. Total revenue declined by $167 million, or 1.9 per cent1, from the previous year. While Parcels revenue declined from 2021, the line of business ended 2022 with stronger revenue than before the pandemic started. Transaction Mail volumes continued to erode. Direct Marketing revenue and volumes slowly recovered from the prior year.
Canada Post's overall cost of operations fell by 0.8 per cent from the previous year. This was largely due to lower employee benefits driven by higher discount rates, and reduced labour costs related to lower parcel volumes. As the business shifts from mail to parcels, pressure on costs continues. The Corporation is making strategic investments to improve service and tracking, enable its network, increase capacity and enhance the customer experience. With an obligation to deliver to all Canadian addresses, the continued growth of the Canada Post network added to costs in 2022. Addresses increased by approximately 219,000 during the year.
The ecommerce parcel delivery sector in Canada has transformed over the past few years, as significant growth in online shopping resulted in increased competition. While online shopping has slowed partly due to economic uncertainty and the rising cost of living, the ecommerce market is expected to more than double over the next decade. With parcels representing approximately half of Canada Post's revenue, the Corporation is investing to better position itself in a competitive market and ensure the postal service continues to be a valued delivery partner. While the immediate focus must be on critical investments and improvements to meet the changing needs of Canadians and Canadian businesses, financial self-sustainability remains the Corporation's medium- to long-term goal. Canada Post has a long-standing mandate to be financially self-sustainable while serving all Canadians.
In 2022, Parcels revenue declined by $99 million, or 2.3 per cent, and volumes fell by 75 million pieces, or 20.4 per cent, compared to 2021, when volumes remained elevated due to COVID-19. Increased competition, coupled with the return to in-store shopping and lower consumer spending, negatively affected Parcels volumes in 2022. Limited shipping capacity out of China and supply chain disruptions also impacted inbound parcels. The Corporation proactively managed its commercial customer and product mix to help offset the decline in revenue. Canada Post continued to invest in capacity to position its Parcels business for long-term growth.
Transaction Mail revenue declined by $70 million, or 2.4 per cent, as volumes fell by 165 million pieces, or 6.3 per cent, compared to 2021. Revenue and volumes declined from higher levels in 2021, when the line of business benefitted from the 2021 Census and federal election mailings. Maintaining regulated stamp prices at 2020 levels throughout 2022 also negatively affected revenues. Transaction Mail continues to erode as consumers and mailers migrate to digital channels.
Direct Marketing revenue increased by $32 million, or 3.9 per cent, as volumes rose by 67 million pieces, or 2.1 per cent, from 2021. Personalized Mail™ and Neighbourhood Mail™ revenues and volumes increased slightly at the start of 2022 as businesses resumed marketing campaigns amid the post-lockdown return to in-person shopping. Campaigns then slowed, however, as economic uncertainty rose and businesses pulled back on spending. Declining consumer spending and global paper shortages also negatively impacted demand for marketing campaigns. Publications Mail revenue and volumes declined slightly due to the timing of mailing campaigns and a continued drop in paper subscriptions. The Corporation continues to invest in Direct Marketing products to maximize their value proposition and integrate them with digital experiences.
Group of Companies
The Canada Post Group of Companies recorded a loss before tax of $292 million in 2022, compared to a loss before tax of $246 million a year earlier. Purolator's profit before tax of $317 million increased from $269 million in 2021. SCI's 2022 profit before tax of $16 million declined from $24 million in the previous year.
SOURCE: Canada Post