TradeMe clients bolster NZ Post parcel volumes

Trading on shopping website TradeMe has helped to boost New Zealand Post's parcel volumes by 7 per cent - the first time in years this mail has shown growth, says chief executive John Allen.

The state-owned company will disclose its financial result for the June year on September 23.

Allen said 45c letter mail had continued to decline markedly, but a gutsy performance in other mail volumes meant the Government could expect another good dividend.

Last year the group paid the Government a dividend of $30 million, compared with $16 million the previous year.

Allen attributed the increase in package and parcel mail to on-line trading, with auction website TradeMe, used by a quarter of the population, the biggest contributor.

Business mail volumes also grew during the year, Allen said.

That, combined with the lift in parcel volumes, had resulted in a slight net growth in mail volumes, which had reversed a trend.

"The irony is that some of our volume in full rate [45c] mail is no doubt being lost on-line - and everyone predicted on-line would be the death of the postal business - but on-line trading is providing huge growth in parcels, and data base management is driving huge growth in direct marketing," he said.

Full-rate letter volumes had fallen 1.8 per cent during the year, but that had been the continuation of a trend rather than a result of the cost of a standard letter rising 5c to 45c in April last year.

The annual result would show strong growth in the use of mail for marketing.

"Research demonstrates that for many categories of communication, people prefer to get certain things by mail, such as loyalty programmes, bills, statements and types of product promotion," Allen said.

"Mail is a legitimate and powerful part of the marketing mix, and that has driven growth in the past year."

 

The annual result will show Post's gain on the December sale of 50 per cent of its express and courier business to global distribution heavyweight DHL, owned by Deutsche Post.

Post has previously said the transaction was expected to value the new Post-DHL 50:50 joint venture at between $160 million and $180 million.

But the gain from the Paper Plus purchase of Post's Books and More 33 store franchise chain, effective from Thursday, is unlikely ever to be made public. The company said it was commercially sensitive.

Books and More shops host Post Shops, which provide a range of postal products and services, including bill payments and, in many shops, Kiwibank.

Allen said Books and More, 50 per cent bought by Post in 1999 and the rest in February last year, had been "an experiment".

There was a strong link between postal services and books and stationery, but specialist book-selling required a commitment and expertise which was not Post's core business.

Allen said subsidiary Kiwibank would show a strong result. Up to 500 people a day were joining the bank, which now had a mortgage book of $1.5 billion, up $300 million on its last publicised home loan tally in February.

The bank in February posted its first profit since being formed in 2002, recording a December half-year surplus of $2.5 million compared with a loss of $1.5 million for the corresponding period in 2003.

Allen said the bank had been "knocked around" by the big trading bank mortgage wars but was recovering home-lending momentum and deposits were growing strongly.

It would be January or February before he could say how many mail processing jobs would be axed by a $35 million national technology upgrade.

About 2500 people work full or part-time in mail processing and job losses are expected to be significant.

Allen said the cost of the new technology and associated new mail centres in Auckland, Hamilton and Christchurch would not have an impact on Post's bottom line until the 2005-06 financial year.