NZ Post has recorded a net profit after tax of $102 million for its full year financial result with continued growth in parcel volumes.
This was up $70m over the prior year driven by an increase in earnings from its share in Kiwi Group Holdings and growth in the parcel segment.
Parcel revenue grew to $658m, up $137m on the previous year. This reflected volume growth with 93 million parcels delivered, up by 8m on the previous year.
During the year NZ Post also signed a $20m financing agreement with New Zealand Green Investment Finance (NZGIF) to accelerate the transition of the NZ Post fleet and its delivery contractors’ vehicles to electric vans and low emissions vehicles.
NZ Post chief executive David Walsh says the financial results were pleasing but there are “much higher expectations on long term performance”.
“The next couple of years will be extra challenging as we face into rising costs and a tight labour market. In the shorter term we’ve prioritised our people. We will also have costs impacting our earnings until both our network investments and a mail solution begin to deliver the expected benefits,” Walsh says.
Revenue from the parcel segment continues to perform strongly, driven by volume increases including lockdown related volume surges and large peaks of online spending during holiday and event shopping days.
“We continued our strong control of costs, actively reducing our cost structures in support areas. At the same time, we saw our direct costs increase from processing and delivering this un-forecasted parcel volume, which included bringing on more people, sites and transport combined with the difficulty and inefficiency of operating in a COVID environment.
“Despite this, we did not begin to pass on COVID related costs to our customers until the second half of the year, supporting them in delivering for their customers while suppressing our earnings. We also made a conscious decision about paying our people fairly, understanding the margin impact that this would have,” Walsh says.
“We note that volume growth in the parcel segment has since returned to more normal levels post New Zealand’s lockdowns of 2021,” he adds.
The financial year also saw the state-owned enterprise sign a deal to purchase transport and logistics firm Fliway Group NZ. The acquisition broadens NZ Post’s product and service offering into larger items as well as strengthening its logistics and supply chain capability.
“This acquisition directly responds to our customers’ needs to process and deliver a wider range of products, particularly oversize items,” Walsh says.
“The Fliway purchase, along with the acquisition in July 2021 of 50% of Supply Chain Solutions (NZ) (2021) Limited, continues to support our strategy to enable e-commerce growth and deliver what New Zealander’s care about,” he says.
“During the year, the investment into our parcel processing infrastructure has continued at pace. The Christchurch Processing Centre officially opened in August 2022, and the new Wellington Super Depot is scheduled to be formally opened in October 2022.
“A new processing centre in Wiri, Auckland, is scheduled to commence operations in 2023. This investment will enhance customer experience through delivery efficiency and greater digital parcel transparency,” he adds.
Meanwhile, letter volumes continue to decline for the company. In the 2022 financial year there were 238m letters delivered, a decrease of 36m (or 13%) on the previous year contributing to an overall $45m decline in revenue in the mail segment.
“We are continuing to progress work on a sustainable long-term solution for mail services, which will include pricing, cost and operating model changes,” Walsh says.
During the year, NZ Post also worked with unions to deliver a “significant pay increase” for frontline workers.
It also agreed to sell its 53% shareholding in Kiwi Group Holdings Limited (the parent company of Kiwibank) to the Crown. This is expected to be settled in the first half of this new financial year.
