NZ Post lifts first-half profit 10% on asset sales
New Zealand Post Group lifted first-half profit 10% after the state-owned mail service reaped one-off gains from selling assets as it overhauls its operations away from traditional letter delivery.
Net profit rose to $110 million in the six months ended December 31, from $100 million a year earlier, the state-owned enterprise said in a statement. Stripping out the gain from asset sales, earnings fell 14% to $74 million on an 8.8% drop in revenue to $766 million.
In November, NZ Post sold its outsourcing Converga division to Canon Australia for an undisclosed sum, which it said completed its strategy of selling non-core assets. The company today said there was a "net positive impact" of $42 million from the disposal of assets in the first half of 2016.
NZ Post's banking subsidiary, Kiwibank, accounted for the bulk of the SOE's earnings, increasing profit 1.4% to $73 million, as total lending grew 4.8% to $16.4 billion.
The SOE is three years into a five-year transformation plan as it contends with shrinking mail volumes in an increasingly digital world, laying off staff and reducing its physical store footprint.
Last year it pared back traditional letter delivery services, moving to alternate day delivery for standard letters in urban areas. At the same time, the group has targeted earnings growth from Kiwibank, which was established 14 years ago.
Letter volumes fell by about 60 million units in the past 12 months, and chief executive Brian Roche said the company was losing $20-30 million every year from lower letter volumes.
"We have made some progress in parcels in the last year but there's a lot more we can do," Mr Roche said. "We will continue to make necessary changes so that the nationwide letters network runs sustainably, including pursuing further cost savings."
Mr Roche said the mail business would focus on strategic investment, automation and improving customer services.