New Zealand Post Group announce $35.4 million half year result

24 February 2012

New Zealand Post Group has recorded a net profit after tax (NPAT) of $35.4 million for the half year ended 31 December 2011. This compares with a NPAT of $15.8 million in the corresponding period in 2010.

Group Chief Executive Brian Roche said while the improvement in the Group result on the previous period was pleasing, they were in line with expectations and was not a case of ‘turning the corner’.

“New Zealand Post faces the challenge of operating in a flat economic environment with residual effects of the Christchurch earthquake and the ongoing uncertainty in the global economy.

“The improved result does not alter the urgency and need to maintain momentum for New Zealand Post to pursue its strategies of delivering a sustainable postal network for the future, growing Kiwibank, creating new digital offerings, and recreating our store network to meet modern consumer needs,” he said.

Operating revenue increased by $27.7 million compared to the same period the previous year, with Kiwibank being the significant contributor. The postal business experienced continued decline in letter volumes and performed close to plan. The courier and logistics business provided a solid contribution to earnings. Group costs were on track.

The Directors have declared an interim dividend of $2.5 million for the period, compared to the $1.8 million dividend posted in the equivalent period of the previous financial year.

“Kiwibank’s performance which included increased total lending of 5 percent and retail deposits of 8.6 percent is particularly pleasing, being achieved despite an ongoing soft mortgage market and ongoing subdued economic conditions, Mr Roche said.

The decline in mail volumes continued to present cost and revenue challenges. New Zealanders posted 29.4 million fewer letters domestically compared to the same period last year – a fall of almost 7 percent.

“We continue to manage this ongoing decline in both domestic and international mail volumes through close attention to cost management. However, containment of operating costs is not going to deliver a sustainable earnings performance in the postal business.

“We are finalising a plan of action to ensure New Zealand Post can operate a physical network that is sustainable and addresses the fundamental change that technologies are making to customer behaviour.

“We have made good progress in the past six months in testing new technology and systems to begin changing our store service network to provide customers with accessible services, matching their changing lifestyle and ways of doing business,” Mr Roche said.

Testing in the store network has included self-service postal and bill payment kiosks being introduced into several stores, and the establishment of pilot stores with simplified product ranges and streamlined processes

Mr Roche added that good advances had been achieved in the development of digital services which would play an important part in the Group’s strategy to meet the challenges faced by its primary business sectors.

“The half year results reflect where New Zealand Post expected to be, and are the result of good cost management, and encouraging growth in Kiwibank.

“The financial result aside, the business is making good progress towards implementing its major strategies of a sustainable network of the future, providing a service network to meet the needs of New Zealanders, growing Kiwibank and creating new digital offerings,” said Mr Roche.

Summary of Financial Performance New Zealand Post Group

$ millions Six months ended 31 Dec 2011 (unaudited) Six months ended 31 Dec 2010 (unaudited) 12 months ended 30 June 2011 (audited)
Revenue from operations 679.7 652.0 1279.7
Operating Expenditure 638.1 638.8 1309.6
Operating Profit 41.6 13.2 -29.9
Profit before Income Tax 43.9 21.7 -34.6
Net Profit After Tax 35.4 15.8 -35.6
Share Capital 192.2 192.2 192.2
Shareholders’ Equity 833.0 843.9 794.4