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George Graves-Sampson delivers mail in Toronto on Tuesday, May 1, 2012.Matthew Sherwood/The Globe and Mail

Canada Post reported pretax profit of $127-million in 2012 thanks to one-time gains from recent labour concessions, but a growing "sinkhole" from tumbling mail volume likely means a return to losses next year.

The federal Crown corporation lost money for the first time in 16 years in 2011, posting pretax loss of $253-million.

The return to profitability in 2012 is an aberration, caused by a one-time recalculation of the expected future cost of sick leave and post-retirement health benefits, company officials insisted.

"The decline in mail volume is creating a sinkhole that we need to climb out of," spokesman Jon Hamilton said.

Without these items, Canada Post would have lost $25-million last year, according to the company's annual report, tabled in Parliament Wednesday. The loss for the core Canada Post operations, which excludes the Purolator courier business, would have been $54-million

And the company is warning that it must continue restructuring its business to counter dwindling mail volumes

Canadians mailed almost a billion fewer pieces of mail last year than in 2006. Domestic letter-mail was down 6.4 per cent in 2012, compared to 2011. Canada Post says it's now delivering nearly 25-per-cent less mail to each address in Canada than it was just four year ago.

Mr. Hamilton said concessions from workers secured in recent collective agreements help, including lower wages for new hires and an end to banked sick days. But they don't alter the long-term deteriorating trend in its core mail business.

He said the parcel business continues to do well. But because it's less than half the size of the letter business, it's not enough to keep Canada Post profitable, according to Mr. Hamilton.

"The epic decline in mail volume means we have to look at all aspects of our business," he added.

In a statement, the company said it would continue to "explore and pursue opportunities to reshape its business and adjust its labour costs." The company warned that more "fundamental changes" are coming as it works to transform its business.

The solvency deficit of the company's pension plan reached $5.9-billion in 2012, up from $4.7-billion the year before, according to the annual report.