New Zealand Post Result - ‘Very Tough’ Quarter

New Zealand Post Result Confirms ‘Very Tough’ Quarter

New Zealand Post today reported a tax-paid loss of $3.8 million for the three months to 30 June 2000 compared with an un-audited net profit of $5.1 million on the previous year’s quarter (audited net profit of $30.2 million for the 12 months ended
31 March 2000). 1

“We predicted a very tough quarter at the announcement of our 1999/2000 result in June this year, based on the sharp decline in mail volumes we observed at the time,” says Chairman Dr Ross Armstrong.

Total mail volumes for the quarter were down 5 per cent on the same quarter last year, the result of a flat domestic economy and growing electronic substitution.

“Over the past two months we’ve seen mail volumes pick up slightly but as advised in June we expect a lower profit result next year,” says Dr Armstrong.

Operating revenue of $219.2 million was up 7.1 per cent on the same quarter last year ($204.7 million for the three months ended 30 June 1999), although below expectation. The acquisition of Ansett Express in July 1999 and significant growth in the international consultancy business through subsidiary New Zealand Post International Limited (NZPIL), were major contributors to growth.

Operating expenses increased by 12.5 per cent to $217.9 million on the same quarter last year, and reflected a range of factors, including costs associated with Ansett Express, expansion of NZPIL’s international consultancy business, and increased costs in developing new business strategies.

Service performance was strong with the company achieving its best-ever measure of service performance – 98.1 per cent of Standard Post mail was delivered on time.

New Zealand Post Chief Executive Mr Elmar Toime said the company was firmly focused on improving productivity across its business.

“Our medium-term forecast is for static or declining letter volumes as electronic substitution continues to gain momentum. No short-term relief is expected from growth in the economy. Therefore, we need to more efficiently manage resources in a lower volume environment, and make better use of technology to reduce cost structures without compromising service standards.”

Mr Toime said New Zealand Post had also been affected by rising costs, particularly fuel costs, which have had an impact on the company’s transport network. Vehicle running costs, for example, were up 31.6 per cent on the same quarter last year.

“The difficult quarter and expected lower volume environment have reaffirmed the relevance of our strategies in anticipating and adapting to the changing business environment,” said Mr Toime.

“For example, NZPIL continued to extend its global reach over the quarter, signing a Memorandum of Understanding with the Nigerian Government to transform the Nigerian Post Office from a loss-making government department into a commercial organisation. NZPIL also opened an office in Spain to develop European and South American opportunities.”

In e-commerce New Zealand Post is developing ebusiness tools within the company to improve interaction with customers, and develop new sources of business income for the future.

An example was the introduction of Internet kiosks into some Post Shops over the quarter as part of a trial offering electronic bill payment options and search facilities. This highlights how New Zealand Post can provide New Zealand communities with a link between the wired and unwired world.

“The year ahead is going to be a tough one but New Zealand Post’s priorities are focused on creating value through growth strategies, and building on the strengths of the core business to ensure long-term success,” says Mr Toime.

FINANCIAL PERFORMANCE SUMMARY

Financial Performance Three months ended 30 June 2000 (audited) Three months ended 30 June 1999 (unaudited) Twelve months ended 31 March 2000
(audited)
Operating Revenue $219.2m $204.7m $921.5m
Operating Expenditure $217.9m $193.7m $848.8m
Net Earnings $(3.8)m $5.1m $30.2m
Issued and Paid-Up Capital $120.0m $120.0m $120.0m
Shareholders’ Funds $197.2m $193.7m $200.9m

Ends
For further information contact:

Simon Taylor, Media Relations Manager
Ph: 04 496 4015 or 025 248 6715 or email simon.taylor@nzpost.co.nz

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