Friday 25th February 2011 1 Comment
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New Zealand Post Group's half year net profit fell to $15.8 million from $42.5 million a year earlier, with the state-owned organisation saying its result was affected by continuing effects from the economic downturn.
Expenditure in the six months to the end of December was $49.8 million higher at $638.8 million, due mainly to a $26 million rise in bad debt provisioning by Kiwibank, a one-off $5.7 million loss on sale of an Air Post aircraft, and ongoing cost pressures. The result was also affected by a $13 million reduction in fair value gains in Kiwibank, NZ Post said today.
Operating revenue rose $30.5 million to $652 million compared with the same period last year, with Kiwibank and Datam being the main contributors to the improvement.
The postal business and store network produced lower revenue due to a continuing customer trend towards electronic mail and online transaction use.
An interim dividend of $1.8 million is to be paid, compared to $5.7 million for the same period last year.
Slow economic activity, digital substitution and competitive trading conditions remained immediate ongoing challenges, group chief executive Brian Roche said.
"We have taken a variety of initiatives to address the underlying performance of the group, simplify the business and strengthen our customer focus, including our ongoing work in developing digital products."
Excluding the higher debt provisioning, the core Kiwibank business continued to grow, although at a slower rate than a year earlier, Roche said.
Domestic mail volumes for the half year were down by 3.6%, or 15.7 million items -- a lower rate of decline than in recent years, with local body election mailouts offsetting an underlying annual volume decline of about 4.5%.
That, combined with price changes from October 1 and close attention to cost management, had enabled the postal business to exceed expectations for the period.
Flat economic activity resulted in static courier and freight volumes for Express Couriers, NZ Post's 50:50 joint venture with DHL in New Zealand.
Trading conditions were also challenging for Parcel Direct Group (PDG), the 50:50 joint venture with DHL in Australia.
Following a write down of PDG in the 2009/10 financial year, its future status had been reviewed and a decision made to start a divestment process for all or part of that business, Roche said.
In the shorter term, the conditions affecting the first half results had continued into the second half of the financial year and he did not expect the group to achieve its full-year net profit target of $60.8m.
The Christchurch earthquake on Tuesday would affect the group, but the impact had yet to be quantified.
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