Despite more people still choosing email over snail mail, the Canada Post Group of Companies says it's on track to earn a profit this year despite an earlier forecast for a multimillion-dollar loss.
The Crown corporation said it earned $84 million before tax for the first three quarters of the year, driven by its parcels business and higher stamp prices, along with lower employee benefit expenses.
In its 2014 corporate plan, it had projected that it would lose $274-million before taxes for the year.
"Despite the uncertainty about volume erosion, improvements to the bottom line are expected to continue in the fourth quarter and a net profit for the year ended Dec. 31," Canada Post said as it reported third-quarter results Wednesday.
The last year it recorded a net profit was in 2010.
The company said it earned a net profit of $22-million for the third quarter, as it handled more packages but was impacted by fewer mail and flyer distribution deliveries. The profit reversed a net loss of $73-million in the same period a year earlier for the group, which also includes the Purolator courier service and other businesses.
Revenue from operations were up seven per cent to $1.874-billion, compared with $1.752-billion a year ago.
The improved finances come as Canada Post cuts costs and revamps its operations with the end of home mail delivery.
In announcing the move last year, Canada Post also said about 6,000 to 8,000 positions would be eliminated within the next five years, mainly through attrition.
The union representing postal workers has challenged the decision to end home mail delivery in Federal Court and argues that Canada Post can be successful without the move.
"At this point, it's obvious that these cuts are based on attacking public services, rather than the facts," Denis Lemelin, national president of the Canadian Union of Postal Workers, said Wednesday.
"Our post office has been profitable for the vast majority of the last 20 years and continues to be profitable. We need to stay headed in the right direction, not cut back on a good service."
Canada Post, the group's largest division, had a net profit of $6-million for the 13-week period ended Sept. 27. A year ago, it reported a net loss of $88 million for the same period.
The traditional post office business saw its revenue from operations climb 7.5 per cent to $1.443-billion, up from $1.343-billion in the comparable period of 2013, helped by growth in parcel deliveries and higher stamp prices.
Revenue for packages grew 8.2 per cent to $337-million in the latest quarter, as volumes jumped by nearly the same percentage or nearly three million pieces.
Despite the growth, Canada Post still felt the impact of lower mail volumes which continued to fall. Transaction mail was down 6.1 per cent or by 58 million pieces in the quarter as more people continued to turn to alternatives like email.
Canada Post said it doesn't plan on hiking stamp prices in 2015, after increasing them earlier this year as part of a wider strategy to cut costs and improve results.
The Crown Corporation said it also benefited from lower employee benefit costs, which came in at $48 million for the third quarter due to strong pension asset returns in 2013 and an increase in the interest rates used to calculate the pension plan liabilities. But, it warned that this could change easily.
"Employee future benefits, including pension, continue to be highly volatile and unpredictable and remain a significant factor in the corporation's operating results," the Canada Post Group said.
Meanwhile, the company's Purolator business earned $14 million for the quarter on revenue from operations of $409 million, up from a profit of $12-million on $393-million in revenue in the same quarter last year.
Canada Post's logistics business, which includes SCI Group, earned $3 million on $59-million in revenue from operations, up from $2-million on $43-million in revenue a year ago.