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    2019 Annual Report
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    The story of 2019

    In 2019, the Canada Post segment is reporting a loss before tax of $153 million.

    This loss can be attributed to several key factors. The Parcels business continued to grow in 2019, with revenue surpassing Transaction Mail (mostly letters, bills and statements) for the first time. However, overall Parcels growth slowed from 2018. Transaction Mail and Direct Marketing continued to decline while costs continue to increase as the number of addresses to serve grows.

    Canada Post has a long-standing mandate to serve all Canadians while remaining financially self-sufficient, and so it funds its operations with the revenue generated from the sale of its products and services, not taxpayer dollars. The important balance required to successfully fulfill this dual mandate is a challenge. The company is addressing this challenge as it invests and evolves to meet Canadians’ changing needs and expectations.

    In detail, the key factors in the 2019 results are:

    1. Canada Post’s Parcels growth continued but at a slower pace than in 2018.

      Even though Canada Post remains the country’s e-commerce delivery leader, the Parcels business did not grow as expected in 2019 and it did not keep pace with the overall growth in e-commerce. Competition to deliver parcels is intense and growing – especially in Canada’s urban centres. Canada Post is now competing not only against established couriers but also against new low-overhead delivery providers as online retailers diversify their shipping partners.

    1. The shift from mail to parcels has a significant impact on the economics and operating model of the postal service.

      In 2019, Parcels revenue surpassed Transaction Mail revenue for the first time in history. As parcel delivery increases, and mail delivery decreases, there is a shift in Canada Post’s economics and operating model. Compared to letters, parcel processing and delivery is significantly more expensive. Parcels require more technology, scans and customer service support. Parcels also require more space in facilities and vehicles (you could fit dozens of letters in the space of one parcel). Often it takes more time for our employee delivering a parcel to interact with the customer (as they sign for a parcel, for example).

    1. Transaction Mail and Direct Marketing continue to decline due to digital substitution.

      Transaction Mail revenue fell by $69 million or 2.5 per cent in 2019 compared to 2018. Direct Marketing was still a $1.1 billion business for Canada Post in 2019, but revenue (including Publication Mail) fell by $32 million or 3.0 per cent compared to 2018.

    1. Costs increase as the number of addresses served continues to rise.

      Every year, there are more addresses for Canada Post to serve. In 2019, there were 168,000 more. This increases costs even as the amount of mail per address declines. Transaction Mail volumes have fallen 55 per cent per address since the peak year of 2006.

    Canada Post Group of Companies

    Revenue from operations

    (in billions of dollars)

    Between 2015 and 2019, the Group's revenue from operations grew from 8.0 billion to 8.9 billion dollars.

    Profit (loss) from operations

    (in millions of dollars)

    Between 2015 and 2019, the Group's profit from operations went from a profit of 169 million dollars to a profit of 7 million.

    Net profit (loss)

    (in millions of dollars)

    Between 2015 and 2019, the Group's net profit decreased. It went from a profit of 99 million to a loss of 14 million.

    Labour costs

    (percentage of revenue from operations)

    Between 2015 and 2019, the Group's labour costs increased from 47.9% to 49.6% of revenue.

    Employee benefit costs

    (percentage of revenue from operations)

    Between 2015 and 2019, the Group's employee benefit costs decreased from 18.1% to 17.4% of revenue.

    Volume

    (in billions of pieces)

    Between 2015 and 2019, the Group's volume decreased from 8.9 billion to 7.9 billion pieces.

    *Result restated due to the retroactive implementation of IFRS 16 “Leases.”

    References in the Annual Report to Canada Post and the Canada Post segment do not include subsidiaries. The Canada Post Group of Companies and the Group of Companies include the Canada Post segment and its subsidiaries, which are Purolator Holdings Ltd., SCI Group Inc. and Innovapost Inc.

    By the numbers

    Canada Post Group of Companies

    (in millions of dollars) 2019 2018 % Change
    Operations1
    Revenue from operations 8,899 8,672 2.6%
    Profit (loss) from operations 7 (82) 109.1%
    Operating margin (%) 0.1% (0.9)%  
    Net Investing and financing income (expense) (30) (36) 16.4%
    Loss before tax (23) (118) 80.3%
    Net loss (14) (93) 84.7%
    Cash provided by operating activities 529 1,066 (50.3)%
    Cash used in capital expenditures (589) (373) (58.1)%
    Financial position1
    Cash and cash equivalents 1,475 1,421 3.8%
    Total assets 10,527 10,211 3.1%
    Loans and borrowings 997 997 —
    Equity of Canada (107) (210) 48.7%
    Volume
    Total volume – Consolidated (in millions) 7,854 8,092 (2.9)%
    Domestic Parcels growth (Canada Post segment) 13.2% 10.9%  
    Parcels growth (Canada Post segment) 8.3% 21.7%  
    Direct Marketing erosion (Canada Post segment) (1.6)% (3.9)%  
    Domestic Lettermail erosion (Canada Post segment) (6.3)% (4.6)%  
    Transaction Mail erosion (Canada Post segment) (6.4)% (6.2)%  
    Transaction Mail volume decline per address (7.3)% (7.2)%  
    Canada Post Corporation Registered Pension Plan
    Pension assets – Fair market value 27,680 24,655 12.3%
    Going-concern surplus (deficit) – To be funded2 3,809 3,317 14.8%
    Solvency deficit – To be funded2 (5,564) (5,735) 3.0%
    Employer contributions – Current3 284 248 14.6%
    Employer contributions – Special3 43 30 43.7%
    Next
    (in millions of dollars) 2019 2018 % Change
    Operations1
    Revenue from operations 8,899 8,672 2.6%
    Profit (loss) from operations 7 (82) 109.1%
    Operating margin (%) 0.1% (0.9)%  
    Net Investing and financing income (expense) (30) (36) 16.4%
    Loss before tax (23) (118) 80.3%
    Net loss (14) (93) 84.7%
    Cash provided by operating activities 529 1,066 (50.3)%
    Cash used in capital expenditures (589) (373) (58.1)%
    Financial position1
    Cash and cash equivalents 1,475 1,421 3.8%
    Total assets 10,527 10,211 3.1%
    Loans and borrowings 997 997 —
    Equity of Canada (107) (210) 48.7%
    Volume
    Total volume – Consolidated (in millions) 7,854 8,092 (2.9)%
    Domestic Parcels growth (Canada Post segment) 13.2% 10.9%  
    Parcels growth (Canada Post segment) 8.3% 21.7%  
    Direct Marketing erosion (Canada Post segment) (1.6)% (3.9)%  
    Domestic Lettermail erosion (Canada Post segment) (6.3)% (4.6)%  
    Transaction Mail erosion (Canada Post segment) (6.4)% (6.2)%  
    Transaction Mail volume decline per address (7.3)% (7.2)%  
    Canada Post Corporation Registered Pension Plan
    Pension assets – Fair market value 27,680 24,655 12.3%
    Going-concern surplus (deficit) – To be funded2 3,317 2,933 13.1%
    Solvency deficit – To be funded2 (5,564) (5,735) 3.0%
    Employer contributions – Current3 284 248 14.6%
    Employer contributions – Special3 43 30 43.7%

    1. Amounts for 2018 were restated as a result of new or revised accounting standards. For more details, see section 9.2 – Adoption of New Accounting Standards in the Management’s Discussion and Analysis and Note 5 – Application of New and Revised International Financial Reporting Standards in the accompanying financial statements.

    2. The number for 2019 is an estimate. Actuarial valuations for the Plan will be filed by June 30, 2020. For more details, refer to Section 6.5 of the Management’s Discussion and Analysis.

    3. For more details, refer to Section 6.5 of the Management’s Discussion and Analysis.