27 Jun 2013

NZ Post says it will continue to sell assets

5:50 pm on 27 June 2013

New Zealand Post says it will continue to sell assets, including post shops, in a bid to improve its balance sheet and feed the capital-hungry Kiwibank.

The company announced on Wednesday it would close its Wellington, Hamilton and Dunedin mail processing centres costing about 500 jobs.

Centres at Auckland, Palmerston North and Christchurch will be expanded creating 380 new jobs.

The changes will be phased in over the next one to two years.

The move is not a surprise as NZ Post strives to make changes to offset the fall in mail volumes which it says is occurring at a rate of about 8% a year.

Last week it announced it would cut 100 corporate jobs and last year sold its stake in Datacom and its head office building in Wellington for $202 million.

The organisation is also under pressure to ensure Kiwibank, the jewel in its crown, has enough capital to meet new international regulatory requirements, and to fend off concerns from credit rating agencies.

Standard & Poor's last month amended its outlook for NZ Post and Kiwibank to negative saying it reflected a one-in-three chance the rating of New Zealand Post could be lowered in the next two years due to rising economic risks which could affect the credit-standing of Kiwibank.

New Zealand Post chief executive Brian Roche said there will be costs of restructuring, but the changes will save the company up to $30 million over the next few years.

He said changes to mail processing centres are part of a move to reposition the business to be financially and operationally viable.

Mr Roche said the company will now be looking to sell the Wellington mail processing centre which is in a desirable location on the Petone waterfront.

He said New Zealand Post will continue to liquidate as many properties as it can to better utilise its capital and support the rest of the group, particularly Kiwibank which he describes as a "very strong asset in a very difficult environment".

Mr Roche said New Zealand Post will contribute up to $100 million to Kiwibank over the next two to three years to help it deal with regulatory changes.

He said the retail network also faces a shake-up in the next 12 to 15 months and there will be further job losses in the delivery business.