NZ Post write-downs erase profit

Thursday 5th August 2010 1 Comment

New Zealand Post Group said one-off charges to write-down the value of its mail and parcel operations have wiped out annual profit, adding to pressure to overhaul the state-owned business.

Chief executive Brian Roche announced $19 million of write-downs and provisioning for its international mail business, a $28 million reduction in its Australian courier joint venture and $20 million from changes to depreciation rules arising from tax reform.

Much of the adjustment was a single-year impact, with 2011 net profit forecast to be $60.8 million, rising to $84.3 million in 2012. Operating profit in the year ended June 30 fell 6.7% to $72 million, missing the $80.8 million forecast in its 2009 statement of corporate intent.

“The impact on New Zealand Post’s letters business of economic conditions and digital substitutions is well understood,” Roche said.

“We will continue to work with our shareholders on a range of options to ensure a sustainable future for our mail processing and delivery networks.”

Declining mail volumes and generally tight margins, “especially in the banking sector,” has hurt operating profit across the group, he said.

The postal service company is scheduled to release its full audited accounts on August 20.

The $28 million reduction in value of its 50:50 JV ParcelDirect Group with DHL in Australia reflects economic conditions and delays in integrating its six business units. New Zealand Post “remains committed to our relationship with DHL,” Roche said.

Businesswire.co.nz

Comments from our readers

On 5 August 2010 at 11:37 am Nina O'Fyfe said:

How many more times is this dinosaur going to play the economic conditions/digital substitution card to disguise flagrant mismanagement and a vintage approach to change adaptation in it's market sector? Give Kiwibank it's own life and go back to licking stamps before the whole shooting box becomes toast ... I hope the only reward John Allen received before he jumped ship was a reality cheque!