NZ Post to miss profit target

Monday 30th May 2011

The earnings of state-owned New Zealand Post Group are falling short of its expectations.

NZ Post said today it will not meet its net profit after tax target of $60.8 million for the year ending June 30 due to the Christchurch earthquake, and the overall weak economy.

Chief executive Brian Roche said the underlying performance of the Kiwibank and postal business was still strong and one-off issues would not have a material effect on the group's commercial value or its ability to meet its dividend and debt obligations.

"However, continued flat economic conditions, combined with impacts arising from the Canterbury earthquake and a series of one-off costs would impact significantly on the end year result."

The February 22 earthquake in Christchurch had disrupted the postal business and resulted in bad debt provisions for Kiwibank.

The combined negative impact of the quake on the group was currently estimated to be in the order of $35 million to $40 million for 2010/11.

Roche said the consequences of the earthquake would continue to be felt into the next financial year. Bad debt provisioning could remain an issue well into 2011/12 as the insurance climate and other uncertainties become clearer.

Mail volumes are forecast to continue to fall at the rate of 5% per annum.

"The past two financial years have been difficult ones for New Zealand Post. However the continuing effects of the weak economic environment and the Canterbury earthquake have not deterred the group from taking the necessary and prudent measures which will see us in a stronger position in the near future," Roche said.

NZPA

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