NZ Post 1H saved by banking, courier services as mail slides

New Zealand Post Group, the state-owned postal service, posted a 68 percent jump in first-half profit as stronger earnings by KiwiBank and Express Couriers made up for the continued slide at its core postal service.

Profit rose to $59.6 million in the six months ended December 31, from $35.4 million a year earlier, the Wellington-based company says in a statement. Sales rose 30 percent to $872.3 million, while operating expenditure gained 26 percent to $793 million.

KiwiBank "performed well in a highly competitive market, particularly in the face of aggressive competition in the home loan environment", chief executive Brian Roche says. Express Couriers turned in a "very encouraging" performance in the extremely competitive environment.

For postal services, "tight cost management helped offset the declines in revenue. Thirtyfive million fewer pieces of mail in the network is a stark reminder of the need for change". NZ Post "is confident it can maintain a viable and sustainable network if it is given the flexibility to make necessary changes in the future".

The company will pay an interim dividend to the government of $2.5 million, unchanged from a year earlier.

Revenue from core postal services fell to $383 million in the first half from $404 million a year earlier, while earning tumbled to just $1.8 million from $12 million.

Banking services, the KiwiBank business, lifted sales to $227 million from $205 million, boosting profit to $58 million from $37.9 million.

Courier services revenue soared to $138.5 million from $4.58 million in the first period since NZ Post bought out the remaining 50 percent of Express Couriers. Profit at the courier business rose to $10.5 million from $4.58 million.

Investments generated $112 million of revenue and $3.68 million of profit in the latest period, up from $52 million and a loss of $4.4 million, respectively, a year earlier.

KiwiBank "has maintained strong levels of profitability, although further pressure is expected towards year end", Mr Roche says. "The mail business continues to manage the decline in letter volumes with operational changes to ensure the business remains viable while longer-term initiatives are implemented."

The full-year financial outlook is expected to meet expectations, he says, without being specific.


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