Profit in post as good times roll

New Zealand Post has almost doubled half-year profit, one of its strongest first-half results ever.

And more is likely to come with NZ Post saying yesterday that growth and efficiency gains will contribute to strong full-year results.

Unaudited profit for the six months to December 31, 2004, rose to $40.4 million from $21.7 million in the same period of 2003.

Chief executive John Allen said the strong domestic economy had helped produce one of NZ Post's strongest first-half results ever.

Subsidiary Kiwibank's move into profitability, continuing improvements at NZ Post's Express Couriers business and 1.3 per cent growth in letter volumes all lifted profit.

NZ Post also booked a $6 million gain from the sale of the Christchurch Mail Centre.

Allen said NZ Post's business units continued to operate strongly and the Government-owned company was "optimistic" about delivering a strong full-year result.

The full-year result will include a gain of $80 million to $90 million from the sale of 50 per cent of NZ Post's courier unit to Deutsche Post-owned DHL.

Allen said this joint venture, operating since January 1, was going well. Local businesses understood the improved networks to Asia provided by DHL were "pivotal" to economic growth.

On the postal side, NZ Post will invest about $35 million over the next three to four years on new technology and machinery.

Allen said the company needed to upgrade machinery he likened to "a living museum".

He refused to be drawn on whether the new technology and continuing moves to improve efficiency will result in job cuts.

Growth in the use of letters as marketing tools by businesses helped lift overall domestic mail volumes by 1.3 per cent.

Allen claimed personalised letters for marketing were an "extremely effective" way for businesses to reach customers.

"We see this as a business with a real future."

Meanwhile, Allen said the "Australianisation" of New Zealand business meant increased inbound mail from across the Tasman.

NZ Post is monitoring fuel prices and Allen warned it might impose a fuel surcharge if they stayed high or rose further.