Kiwibank performance helps NZ Post rise above challenges

Jim Bolger (left) and John Allen are delighted with the results. Picture / Mark Mitchell

New Zealand Post's annual underlying June-year net profit rose by 17 per cent despite a challenging business environment, including an accelerated decline in letter volumes and surging fuel prices.

The group, which has a number of subsidiaries and divisions including Kiwibank, junk-mail business Datamail and Express Couriers' joint venture with German freight giant DHL, reported a net profit of $68.7 million.

Last year the group reported a net profit of $137.2 million or $58.6 million excluding the one-off gains made from the partial sale of ECL to DHL.

Group operating revenue at $1.11 billion was up 4.5 per cent on the previous year excluding ECL. Operating expenditure at $1.02 billion was up 3.3 per cent driven by annual wage rises, new jobs at Kiwibank and a $2 million to $3 million increase in fuel costs.

NZ Post chooses not to give figures indicating the relative performance of its various divisions, but chief executive John Allen said the diversification strategy begun about 15 years ago had proved successful for the group again despite "a challenging year".

"So while we have seen quite significant challenges in our domestic letters business ... we've seen strong growth in Kiwibank, a solid improvement in Datamail and continuing growth in our Express business."

NZ Post's core letters business has taken a battering thanks to the rise of email. Letter volumes have fallen by an average of 1 per cent a year. Allen said yesterday they had declined by 2.3 per cent in the June year.

But the ongoing declines were being offset by increasing efficiency and direct mail volumes, much of them related to international marketing operations by New Zealand and overseas companies.

Elsewhere, Allen said the package and parcels division was still seeing growth driven by the "Trade Me and Ferrit phenomenon" of increased online shopping and the ECL joint venture continued to perform well "in a highly competitive market and in the face of rising fuel prices".

NZ Post chairman Jim Bolger said NZ Post subsidiary Kiwibank, which last week reported a doubled net profit of $15.8 million, had made the banking system in New Zealand much more competitive.

NZ Post paid a $27.7 million dividend to the Government and also paid $26.3 million in tax, which took its total contributions to the Government since its corporatisation about 20 years ago to more than $1 billion.