New Zealand Post says the Government must allow it to deliver mail on fewer days so it can rebuild a viable postal service.
NZ Post has reported a profit of $169.7 million for the year to June 30, turning around a loss of $35.6m last year.
However, the improvement was largely due to a stellar $79.1m profit from Kiwibank this week and a $96.2m one-off accounting gain resulting from buying out DHL's 50 per cent stake in the Express Couriers joint venture in June.
Excluding one-off adjustments, the group profit after tax would have been $79.8m compared to $41.7m last year.
The state-owned postal company is required to deliver mail to 95 per cent of households six days a week and 99.9 per cent five days a week.
But chief executive Brian Roche said the agreement was negotiated in 1998, before the internet swept the world. The core postal business is in sharp decline, with 54 million fewer letters sent in the past year and revenue falling by $17m to $345m.
The fall in letter volumes steepened to 7 per cent in the past year from about 5 per cent in recent years and is forecast to reduce by another 20 per cent in the next five years.
“Our view is that decline will continue - the only issue is the rate of decline,” Roche said. “It is imperative NZ Post has the regulatory certainty to allow us to adapt to present market conditions and to plan for the future.”
It is “inevitable in our view” that mail will eventually be delivered on fewer days, he said. Changes to postal products and services had helped to maintain marginal profits.
“However, we have exhausted these short-term fixes.” Initiatives such as reducing the price of stamps had been considered to encourage demand. “The reality is that price is an influence, but convenience is arguably a bigger influence. People are simply not sending letters,” Roche said.
The company had to find new business models that would allow it to maintain a profitable postal service.
The Government was expected to issue a public discussion document regarding future minimum postal delivery services and the Postshop network by November.
NZ Post was prepared to commit to a revised minimum delivery days and store numbers, Roche said.
To help combat the decline in mail volumes NZ Post planned to launch an online bill payment service, called YouPost, this year.
About 20 organisations represented about 85 per cent of the total mail volume.
Those businesses and organisations were looking to reduce their postage bill, Roche said.
Several big businesses and organisations had already signed up to allow customers to pay via YouPost, which would be free to use.
On the bright side, parcel volumes were up about 7 per cent, driven by online trading.
Buying the remaining half of Express Couriers from joint venture partner DHL had given NZ Post a 100 per cent-owned courier and logistics company to take advantage of the growing parcels and logistics markets, Roche said. Fairfax NZ
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