New Zealand Post Group's half-year net profit fell to $15.8 million from $42.5 million a year earlier, with the state-owned organisation saying its result was affected by continuing effects from the economic downturn.
Expenditure in the six months to the end of December was $49.8 million higher at $638.8 million, caused mainly by a $26 million rise in bad debt provisioning by Kiwibank, a one-off $5.7 million loss on sale of an Air Post aircraft, and ongoing cost pressures.
The result was also affected by a $13 million reduction in fair value gains in Kiwibank, NZ Post said yesterday.
Operating revenue rose $30.5 million to $652 million compared with the same period last year, with Kiwibank and Datam being the main contributors to the improvement.
The postal business and store network produced lower revenue because of a continuing customer trend towards electronic mail and online transaction use.
An interim dividend of $1.8 million is to be paid, compared with $5.7 million for the same period last year.
Slow economic activity, digital substitution and competitive trading conditions remained immediate ongoing challenges, group chief executive Brian Roche said.
"We have taken a variety of initiatives to address the underlying performance of the group, simplify the business and strengthen our customer focus, including our ongoing work in developing digital products."
Excluding the higher debt provisioning, the core Kiwibank business continued to grow but at a slower rate than a year earlier, Roche said.
Domestic mail volumes for the half year were down by 3.6 per cent, or 15.7 million items - a lower rate of decline than in recent years, with local body election mailouts offsetting an underlying annual volume decline of about 4.5 per cent.
That, combined with price changes from October 1 and close attention to cost management, had enabled the postal business to exceed expectations for the period.
Flat economic activity resulted in static courier and freight volumes for Express Couriers, NZ Post's 50:50 joint venture with DHL.
Trading conditions were also challenging for Parcel Direct Group (PDG), the 50:50 joint venture with DHL in Australia. After a write-down in the 2009/10 financial year, its future had been reviewed and a decision made to start a divestment process for all or part of that business, Roche said.
He did not expect the group to achieve its full-year net profit target of $60.8 million.