NZ Post makes $6 million profit as post-lockdown parcel volumes surge

Friday, 25 September 2020

NZ Post made a $6 million profit after tax despite revenues plunging during the Covid-19 national lockdown.

The result for the 12 months to the end of June marks a huge turnaround from the previous year’s loss of $121m, which was driven by write-downs in its assets as letter volumes continued to decline.

But the pandemic provided a huge push forward for e-commerce as more households switched to shopping online, and post-lockdown parcel volumes reached levels NZ Post had not expected to see until 2023.

“The return to profit in a year of enormous challenges reflects very positively on NZ Post’s amazing 6500 people who were proudly ‘essential workers’,” said NZ Post chairman Rodger Finlay.

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David Walsh, chief executive of NZ Post, said letter volumes fell sharply during lockdown.

The revenue hit in March and April was followed by a huge spike in the numbers of parcels to be delivered in May and June, he said.

Parcel volumes hit levels not expected until 2023 after the national lockdown ended.

“As New Zealand’s largest online shopping and mail delivery partner, we were initially hit hard by the alert level 4 lockdown across all our service lines,” David Walsh, NZ Post’s chief executive, said.

“Once restrictions eased as the country moved to alert level 3, domestic parcel volumes increased dramatically,” he said.

“This came with extra cost, as we had to bring on more people and vans, physical distancing and extra processing sites.”

NZ Post delivered more than 80 million parcels in the 12 months to the end of June, which was an increase of 1 million. Domestic parcel numbers increased by five million as local retailers gained ground, and international parcel volumes dropped as a result of pandemic disruption.

The volume of letters continued to plunge as billing and communications moved online.

Walsh said 72 million fewer letters were sent this financial year compared to the previous one.

During the March/April lockdown letter volumes dropped 50 per cent.

NZ Post received a Covid-19 wage subsidy of $29.7m.

“We’re really proud that we were able to get through these lockdowns with our workforce intact,” Walsh said.

NZ Post would continue to focus on growing its parcel delivery business.

“During the first two weeks of alert level 3, we received 3.5m parcels to deliver, which is approximately 200 parcels per minute.

“This volume tested our network like never before, and is another example of why we need to invest for the future. Since then we have launched a ten-year, $170m infrastructure investment plan to make sure we meet our customers’ expectations and help them grow for the future, as online shopping increases.”

The investment programme began with construction of a new “super depot” for parcels, in Wellington, an upgrade to its Southern Operations Centre in Christchurch in 2022 and a new processing centre in Wiri,Auckland.

The Government was investing in NZ Post, having allocated mail contract for services worth $130m over three years to support the continued delivery of mail services, and allow time to develop the future of mail.

It had also provided a cash injection of up to $150m to recapitalise and strengthen reserves.