New Zealand Post's profit has taken a hit after it paid out a $15 million settlement to the New Zealand Superannuation Fund and ACC over warranties relating to their purchase of stakes in Kiwibank's parent company.
The postal service made a $7 million profit in the six months to December 31 up from $6 million in the same prior period.
It should have been much better after its share of earnings from Kiwi Group Holdings - Kiwibank's parent - rose from $19m to $28m after the bank's profits bounced back.
But an NZ Post statement said the net profit after tax figure has been impacted by a $15m warranty settlement payment made to the Accident Compensation Corporation and NZSF Tui Investments Limited relating to their purchase of 47 per cent of KGH from NZ Post in 2016.
NZ Post sold a 25 per cent stake in Kiwibank to the New Zealand Super Fund, and a further 20 per cent to ACC, both of which are also government-owned.
The deal valued Kiwibank at $1.1 billion, with NZ Post getting $495m in the sale.
But the bank then made a $101m write-down on its failed CoreMod IT project and had to have $247m in cash injected into it by the new shareholders.
An NZ Post spokeswoman said the settlement related to the CoreMod IT project.
Revenue at NZ Post rose $19m to $471m for the half but its expenses also increased by $2m to $454m.
Chief executive David Walsh said it was seeing a positive shift in its result while also holding costs steady.
"The six-month performance is encouraging but there is still a lot of work to do as we continue to change to meet customer and consumer demand and create a viable future-focused business."
While the company delivered a record number of parcels over the last six months its letter business declined by 30 million to 200 million compared to the same prior half.
"While we are committed to providing a sustainable mail service to New Zealand, it's the parcels business that is generating this growth, and there's more work to come.
"We will continue to develop NZ Post's network of the future so that it will meet parcel and ecommerce growth. We will keep pursuing opportunities to grow and will be vigilant about keeping costs down."
NZ Post is in the process of splitting its operations from Kiwibank as the two businesses head off in separate directions.
It is moving to a model where it partners with local businesses to sell its services while Kiwibank has been setting up stand-alone branches and closing other branches as more people use online banking.
The changes have sparked fears among rural communities that they will be left without banking or postal services.