New Zealand Post says it needs to do more to grow revenue to offset the $20 million to $30 million it is losing each year from plummeting mail volumes.
The state-owned company reported net profit after-tax of $110million for the six months to December 31, up $10 million on the previous year, but revenue was down from $836 million to $766 million.
Chief executive Brian Roche said the profit increase was attributable to Kiwibank's performance and proceeds from the sale of Australian-based subsidiary Converga.
However, the postal services business continued to be challenged by tough market conditions and its result was below expectation.
During the last 12 months, letter volume fell by about 60 million units and, while the company had significantly reduced costs, it had not kept pace with the rate of decline. Expenditure was down $73 million to $668 million.
"We will continue to make necessary changes so that the nationwide letters network runs sustainably, including pursuing further cost savings,'' Mr Roche said.
Some progress had been made in parcels in the past year but there was a lot more than could be done.
A highlight was a 7% increase in parcel volumes during the pre-Christmas period compared with the previous year.
Meanwhile, bellwether courier company Freightways was cautious in its outlook in the near term, given the current volatility in markets around the world.
Operating revenue, in the six months to December 31, was up 5% to $255 million, earnings before interest, tax, depreciation and amortisation increased 5% to $51 million and after-tax net profit increased 5% to $28 million.
Chairwoman Sue Sheldon and managing director Dean Bracewell described it as a "sound'' result.
The benefits of diversification into the information management industry, where continued forecast growth was expected, would increasingly underpin the company's performance as the more cyclical express package and business mail industry entered a period where achieving year-on-year growth might be challenging.
In the express package and business mail division, operating revenue of $187 million was 1% higher than the previous corresponding period (pcp).
Ebitda of $35 million and ebita of $32million were both 1% lower than the pcp but, allowing for four extra trading days in the pcp, the latest result would have been ahead of it.
During the half year, branch relocations to larger premises occurred in Dunedin and Tauranga to create more capacity to accommodate expected future volume grow.
Freightways' business mail operator DX Mail continued to expand its postie network and was now offering five days a week delivery in an increasing number of urban locations throughout New Zealand.
While the overall physical letters market continued to decline, the demand for DX Mail's service was increasing.
Forsyth Barr broker Suzanne Kinnaird said Freightways was a "great barometer for NZ Inc'' and its more cautious outlook did not bode well for the rest of the market reliant on domestic economic activity.
