New Zealand Post has revealed that total mail volumes slid more than 8 per cent, a drop of 35 million items in the past six months, compared with a year ago.
NZ Post is barely breaking even on its core postal services, which are up for review with plans to cut back six-day-a-week delivery to a minimum of three days.
It is the worst percentage fall in letter volumes the postal group has seen and compared with declines of 4 to 5 per cent a few years ago.
NZ Post announced an after-tax profit of $59.6 million for the half year to the end of December, up from $35.4m in the corresponding period in 2011.
The profit was boosted by Kiwibank which reported a strong half- year profit of $58m, and because NZ Post had lifted its stake in Express Couriers at the start of the period from 50 per cent to 100 per cent, boosting Post's revenues.
For the half year, NZ Post recorded revenues of $872.3m, up from $670.2m in the same period the year before.
Core postal services made a pre-tax loss of $2.9m, compared with a $8.7m profit in the corresponding half year. But after tax the division made a small profit of $1.8m for the latest period.
Courier services made a profit of more than $10m in the half year, up from $4.5m in the corresponding half year.
"Other operating segments" made a loss of $12m mainly relating to the costs of work on the group's "retail transformation" and "network of the future" projects. That was a factor reducing the overall NZ Post profit to $59.6m, despite the $58m from Kiwibank.
But NZ Post chief executive Brian Roche said "challenges remain for the mail business" with mail volumes down 35 million on a year ago.
"Thirty-five million fewer pieces of mail . . . is a stark reminder of the need to change," Roche said.
NZ Post was confident it could maintain a "viable and sustainable" mail network if it was given the flexibility to make the changes it needed to make.
But the latest mail volume figures showed they needed to make the decisions now, rather than putting it off. NZ Post has not said how many jobs may be lost as part of the proposed changes.
Public submissions are coming in on the proposal by NZ Post to change its minimum service obligations. The deadline for submissions is March 12, with a recommendation going to Cabinet.
The Ministry of Business Innovation and Employment would look at the submissions and then work with NZ Post on a recommendation which would go to Cabinet, but that could take weeks.
NZ Post wants to have a new deed this year.
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