Canada Post reports C$76m loss in Q1 2024

Pre-tax revenue fell by C$76m (US$55.4m) in the first quarter of 2024 as revenues for parcels and transaction mail declined, Canada Post has reported.

According to the post, the Q1 loss improved compared to the same period in 2023 due to the receipt of non-recurring dividends, partly related to the divestiture of third-party logistics provider SCI Group Inc. in March. Without these dividends, Canada Post’s loss before tax would have been approximately C$224m (US$163.5m), compared to a loss before tax of C$107m (US$78m) in Q1 2023.

Falling parcel revenues were partly to blame for the poor Q1 results, with revenues falling by C$59m (US$43m), or 5.4%, in the first three months of the year compared to the same period in 2023. Parcel volumes also fell by two million pieces (1.1%) compared to Q1 2023.

According to Canada Post, a crowded and competitive parcel delivery market continued to negatively affect results for the line of business. These market dynamics included growing competition from commercial consolidators that are taking more volume from the conventional inbound postal network. A decline in fuel surcharges linked to market rates also negatively affected parcels revenue.

Transactional mail volumes and revenues also continued to fall, with a year-on-year decline of 16 million pieces (1.1%) and C$20m (US$14.6m) due to consumers and mailers continuing to shift to digital channels.

However, there was some positivity in the direct marketing business, with revenues growing by C$23m (US$16.7m) and volumes rising by 180 million pieces (22.4%) compared to the same quarter in 2023.

Business sales

The divestiture of SCI contributed a gain on sale of C$287m (US$209.5m) to the Canada Post Group of Companies’ results in the first quarter of 2024. As a result, the group recorded a profit before tax of C$106m (US$78m) in the first quarter, compared to a loss before tax of C$58m (US$42m) in the same period a year earlier. Company subsidiary Purolator recorded a profit before tax of C$39m (US$28m) in the quarter, compared to C$46m (US$33.7m) in the same period of 2023.

In January 2024, Canada Post and Purolator announced the divestiture of 100% of the shares of SCI Group Inc and Innovapost Inc., the Group’s shared-services IT provider. The divestitures of SCI and Innovapost closed March 1 and April 15, 2024, respectively. Financial information about the Innovapost sale will be reported in the second-quarter financial report.

According to Canada Post, these strategic divestitures are a key component of its transformation to focus its business and resources on its core mandate of providing a modern postal service to Canadians.