NZ Post annual profit drops 34% after sale of Kiwibank stake

New Zealand Post's annual profit fell by a third after it sold almost half of its stake in Kiwibank.

Net profit fell to $93 million in the 12 months ended June 30, from $141 million a year earlier, the state-owned enterprise said in a statement. Revenue slipped 5.1 percent to $890 million, while expenditure declined 9 percent to $887 million.

The latest earnings include a $71 million contribution from its 53 percent share in Kiwi Group Holdings, down from $131 million the year earlier, after NZ Post sold 47 percent of the Kiwibank business in October. NZ Post booked a $24 million gain on the sale of its Kiwibank holding in the latest year, and a $43 million gain the previous year from the sale of its Converga subsidiary.

NZ Post is in the final year of its five-year transformation plan started in 2013 as it seeks to bolster its core mail delivery business amid declining letter volumes and growing parcel volumes. In the latest year, letter volumes dropped 11 percent while parcel volumes increased 8.5 percent. Its postal business recorded an after-tax loss of $3 million in the latest year, an improvement from a $38 million loss a year earlier, as salary and wage costs dropped to $311 million from $377 million.

"The result is a significant turnaround from 12 months ago," said chief executive David Walsh, who stepped up from chief financial officer to take over the top role in May. "The positive effects of lower costs across the organisation and revenue growth in parcels has more than offset the impact of letter mail decline."

In the coming year, NZ Post will focus on converting parcel volume growth into higher revenue and taking further steps to put the letters part of the business on a more sustainable footing, he said.

NZ Post will pay a $105 million dividend to the Crown on Sept. 30, reflecting a $100 million special dividend from the sale of its Kiwibank stake to the NZ Superannuation Fund and the Accident Compensation Corp. It paid a $5 million dividend to the Crown the year earlier.

(BusinessDesk)