Trade Me parcels boost NZ Post's volumes

Trade Me, the latest darling of the nation's business community, has helped underpin New Zealand Post's half year result, as the parcels and packets sent by online traders make up more and more of the country's mail.

NZ Post yesterday reported a net profit of $34.7 million for the half year ended December 31, down from $40.4 million net profit for the previous December half.

Chief executive John Allen said the difference partly reflected the $6 million gain on the sale of the Christchurch Mail in 2004, as well as the partial divestment of Express Couriers last year. NZ Post went from full ownership of Express Couriers to a 50 per cent stake, so now gets just 50 per cent of its earnings.

Email and other technology continued to eat into the letters business, with domestic mail volumes down 1.8 per cent over the period.

As the art of letter writing fades, bulkier items such as parcels and packets have started to make up more and more of the domestic mail volume, which Mr Allen said was largely due to the "continued Trade Me phenomenon".

Mr Allen said anecdotal evidence from Post Shop staff had some people coming in daily with parcels of goods they had sold on the online auction site, to be posted to their new owners.

He said over the December half year NZ Post handled about one million additional packets and parcels, which had had an impact on the economics of the group's delivery model.

"We are getting fewer overall deliveries, but they are bulkier and heavier and harder to handle."

This posed a problem when it came to posties delivering the mail, given their traditional mode of transport was either a bike or walking.

Mr Allen said there were a range of options which NZ Post could undertake to deal with this shift, one of which was mechanised transport for posties.

While falling domestic mail volumes were a concern, Mr Allen said there were still areas NZ Post could expand. He said one growth area was "unaddressed mail" -- which the unkind lay person might refer to as junk mail .

'That's been driven in part by marketers really beginning to understand that circulars can be a very cost effective and powerful part of an overall marketing mix."

He said the joint ownership of Express Couriers with DHL was working well, but the business had been negatively influenced by the flattening economy, as well as high fuel prices.

Express Couriers has introduced a fuel surcharge to deal with the higher costs.

Mr Allen said despite the challenges NZ Post was facing he was concentrating on cutting costs and improving efficiency rather than looking at raising prices.

"Over time I think price is going to become part of the mix. but we are in a competitive market, we face competitive challenges and you don't want to just leap into making life easier for them."

One efficiency tool will be a review of postal codes, and new automated mail sorting machines. The first new machine is being trialled at Te Puni in Wellington.

Operating revenue for the half year was $565.4 million, down from $618.0 million for same period in 2004. Operating expenditure also fell, to $519.9 million from $559.2 million last year.

The Government will receive a $16.7 million interim dividend.

Mr Allen said the group's diversification was paying off with Kiwibank growing its net profit from $2.5 million to $5.4 million, and Datamail and Express Couriers also both putting in positive performances.

During the period the group sold its 33-store Books and More franchise to Paper Plus.

Mr Allen said despite the challenging economic environment and increased pressure on domestic mail he was confident New Zealand Post could improve on the underlying full year net profit posted last year.

- NZPA