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BusinessDesk: NZ Post 1H profit doubles as Kiwibank sales mask drop in snail mail

BusinessDesk: NZ Post 1H profit doubles as Kiwibank sales mask drop in snail mail

 New Zealand Post, the state-owned postal service, reported first-half profit more than doubled on the contribution from its Kiwibank unit while mail volumes fell.

Profit rose to $35.4 million in the six months ended Dec. 31, from $15.8 million a year earlier, the company said in a statement today. Sales rose 4.2 percent to $679.7 million.

NZ Post will pay the government a dividend of $2.5 million, up from $1.8 million a year earlier, and said the pickup in profit was “pleasing” but not a sign that the business is “turning the corner”.

“New Zealand Post faces the challenge of operating in a flat economic environment with residual effects of the Christchurch earthquake and the ongoing uncertainty in the global economy,” said chief executive Brian Roche.

“The improved result does not alter the urgency and need to maintain momentum for New Zealand Post to pursue its strategies of delivering a sustainable postal network for the future, growing Kiwibank, creating new digital offerings and recreating our store network to meet modern consumer needs,” he said.

The volume of mail handled by the postal service dropped about 7 percent, or by 29.4 million letters in the first half from a year earlier, NZ Post said.

Mail volumes worldwide are on the decline as the internet transforms the way people communicate. Platforms like Facebook let people post birthday greetings and the like without having to find a card, an envelope and a stamp.

“We continue to manage this ongoing decline in both domestic and international mail volumes through close attention to cost management,” Roche said. “Containment of operating costs is not going to deliver sustainable earnings performance in the postal business.”

The company is testing new in-store services including self-service postal and bill-payment kiosks and a slimmed down product range

Kiwibank separately reported its results yesterday, with net income jumping to $37.9 million from $13.9 million a year earlier, reflecting lending growth and recovery from the impact of the Canterbury earthquakes.

NZ Post held operating expenses unchanged at about $638 million in the first half.

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