20 Feb 2017

NZ Post profit down 19 percent after Kiwibank share sold off

12:37 pm on 20 February 2017

New Zealand Post has reported a smaller half year profit, with revenue dropping after it sold a 47 percent stake in Kiwibank in October.

Postshop in Wellington.

Postshop in Wellington. Photo: RNZ / Alexander Robertson

The state-owned postal operator made a net profit after tax of $89 million in the six months to December, a decrease of 19 percent compared with the same period a year earlier.

Revenue fell 9 percent to $467m, mainly due to the lower revenue it received from Kiwibank after selling the stake.

The ongoing decline in letter volumes also dented revenue, which more than offset higher parcel deliveries.

The move towards fewer deliveries a week, designed to to combat the fall in people sending letters helped see costs cut by 13 percent.

New Zealand Post sold 47 percent of Kiwibank to the New Zealand Superannuation Fund and ACC for $493m in October, using the proceeds to repay $180m in debt, and give the government a special dividend of $100m. It also paid the Crown an interim dividend of $2.5m.

New Zealand Post chief executive Brian Roche said the company had put the postal services business on a strong financial footing.

"Given we face the same challenge every year of having to combat the $20-30 million in revenue we lose annually due to the decline in letters, we are pleased that our strategy is delivering and putting the postal services business further in the black."

Profit down 11 percent at Kiwibank

Meanwhile, Kiwibank has reported a 11 percent fall in its half-year profit, which it has attributed to a squeeze on margins and higher costs caused by the Kaikoura earthquake.

The bank, which is owned by the NZ Post, Accident Compensation Corproation and the Super Fund, made a net profit of $63 million for the six months ended December, compared with $71 million the year before.

Its lending was up 4.4 percent and deposits grew 3.9 percent, but it said its margins were being squeezed and it was having to pay more for borrowing overseas.

However, chief executive Paul Brock said the bank was finding growth in small-to-medium business banking.

"This has always been a major target area for Kiwibank and the potential for further growth is significant. New Zealand is built on small businesses and there is a natural alignment between those businesses and a New Zealand-owned company like Kiwibank."

The bank was also hit by disruption to services and extra costs after the Kaikoura earthquake forced it to evacuate its Wellington headquarters and relocate staff and operations.

The broader Kiwi Group Holdings, which includes its Kiwisaver, insurance and mortgage broking business, reported an 11 percent fall in net profit to $65m.

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