New Zealand Post’s annual net profit has dropped by more than a third with softening demand for its courier and postal services seeing the SOE’s profit fall to $71.8 million.

Its profit for the year ending June was down 34.8% from $110.2 million, although chairman Jim Bolger was quick to point out that the two results were not directly comparable because of the “unprecedented economic situation” during the past year and the one-off gains seen in the previous 12 months.

However normalised earnings, after adjusting for various one-off items, were still down 16% from $91.9 million to $77.2 million.

Mr Bolger singled out Kiwibank as one section of the group that had continued to thrive, although NZ Post had provided higher bad debt provisioning for Kiwibank of $12.2 million, compared with $2.9 million in the previous financial year.

Others areas such as postal services, Datamail and the company’s courier joint ventures had been affected to “varying degrees” by the economic downturn, according to Mr Bolger.

Restructuring costs, primarily within the postal services area of the group, rose to $11.0 million compared to $3.8 million last year.

Mr Boger said that while the New Zealand Post group had not been able to achieve its financial performance targets, it still performed “reasonably well” given the “most difficult trading conditions seen in six decades”.

He said dividends payments of $6.9 million were down from $23.5 million in the previous year and that continuing economic uncertainty in the coming year would have an impact on NZ Post's performance.

"I'm confident that the business diversification strategy we have successfully implemented since 1987 positions us strongly to ride out the challenges ahead and will continue to help the New Zealand Post group deliver positive results. However, in the short term, a lower level of profitability is likely compared to previous years."

Acting chief executive Sam Knowles said Kiwibank had continued its high levels of growth, was well positioned for future growth and had increased staffing levels to service its expanding customer base.

But continued erosion of traditional postal volumes – both locally and globally – due to the use of e-mail and other competition was worsened by the significant impact of the global recession on mail flows as business activity and associated mailings slowed.

Over the past year, the postal services group saw a 6.7% drop in total addressed mail volumes, equating to more than 65 million items.

Mr Knowles said the earnings contribution from the postal services business fell from $67.3 million in 2007/08 to $25.4 million.

The business downturn also hit the parcel and freight volumes carried by NZ Post’s two 50:50 joint venture courier and express companies - Express Couriers in New Zealand and ParcelDirect Group (formerly Express Couriers Australia) in Australia.

The wholly-owned Datamail group had also seen a softening in demand for bulk print projects, but the company said Datamail was achieving significant progress with its more diversified portfolio, including online products, paperless accounts services and customer relationship tools.