USPS reports US$450m loss for Q3

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USPS has recorded an overall loss of US$450m for the third quarter (Q3) of the fiscal year running from April 1, 2016, to June 30, 2016.

The post reported operating revenue of US$16.6bn for Q3, an increase of US$117m, or 0.7%, over the same period last year. However, the business suffered both a controllable loss and a net loss for the quarter. Calculation of controllable loss takes into account the impact of operational expenses, including compensation and benefits. In addition, revenues were approximately US$450m less than they otherwise would have been during Q3 because of the expiration of the exigent surcharge on April 10, 2016.

The Shipping and Packages business continued its strong performance, with revenue growth of US$645m, or 18%. This was offset by a decline in first-class mail revenue of US$379m, or 5.5%, due largely to the expiration of the exigent surcharge. The expiration of the surcharge will reduce revenue by an additional approximately US$500m for the fourth quarter and by almost US$2bn annually.

Megan J Brennan, CEO, USPS, said, “We continue to post double-digit gains in package volume and are well positioned operationally for further growth. Our capital investments are enabling increased efficiencies across the enterprise and improving experiences for our customers. Despite the encouraging numbers, net losses continue to mount. Our results in the quarter further underscore the need for legislative reform that provides the organization with greater financial stability.”

The controllable loss for the quarter was US$552m, compared with US$197m for the same period last year. The net loss for the quarter was US$1.6bn, an increase of US$981m over the same period last year. The increase was mostly due to a US$1.6bn unfavorable change in workers’ compensation expense as a result of interest rate changes, offset by the US$1.1bn change in accounting estimate.

Joseph Corbett, chief financial officer and executive vice president, USPS, said, “Although the postal service achieved strong results in package delivery and standard mail volumes, only a slight increase in total revenue was recorded due to a mandated price reduction earlier this year. We incurred a net loss resulting, in part, from continued decreases in first-class mail volume and systemic financial imbalances associated with our retiree health benefit prefunding requirements.”

August 10, 2016

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Helen has worked for UKi Media & Events for nearly a decade. She joined the company as assistant editor on Passenger Terminal World and since progressed to become editor of five publications, covering everything from aviation, logistics and e-commerce to meteorology. She has a love for travel and property and has redeveloped three houses in three years. When she’s not editing magazines, she’s running around after her two boys and their partner in crime, Pete the pug.

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