With the risk of a work disruption in the third quarter, Canada Post’s commercial customers made other arrangements to deliver their parcels and mail, which reduced volumes sharply. While we reached tentative agreements with the Canadian Union of Postal Workers on August 30, volumes took longer to recover.
We estimate the net financial impact of the labour uncertainty at $100 million for the third quarter. That figure reflects the significant reduction in revenue but also slightly lower costs, such as less use of overtime and temporary employees. Employee benefit expenses were also lower in the third quarter due to a $44-million non-cash one-time gain. It resulted from the new collective agreement with the Canadian Postmasters and Assistants Association (CPAA) in August.
The Canada Post segment’s $60 million loss before tax in the third quarter compares to a loss before tax of $13 million in the third quarter of 2015.
Key results for the Canada Post segment in Q3 compared to Q3 2015
- Parcels revenue decreased by $30 million or 7.9 per cent.
- Volumes declined by 2 million pieces or 5.2 per cent.
- Over the first three quarters of 2016, Parcels revenue is up 4.5 per cent and volumes are up 5.9 per cent compared to the first three quarters of 2015.
- Transaction Mail volumes continued to erode significantly, for the 20th straight quarter.
- Volumes fell 120 million pieces or 13.8 per cent. Revenue fell by $79 million or 10.8 per cent.
- The revenue and volume declines are a result of the labour uncertainty. As well, Q3 2016 is compared to Q3 last year, when the federal election increased our volumes.
- Direct Marketing revenue decreased by $45 million or 15.2 per cent.
- Volumes fell by 210 million pieces or 17.5 per cent.
- Again, results were affected by the labour uncertainty and by comparison to Q3 2015, which had benefited from election mailings.