Canada Post has issued on August 17th a clarification of its 2010 financial state. It is sharply different than that of the 2010 Annual Report.
This media release was likely the result of mis-interpretation of by the public on the Annual Report results. The initial results were from the Canada Post Group – this is Canada Post along with its subsidiaries such as Purolator. The Canada Post segment is found later on in the report, but most have not read that portion yet. This makes many think Canada Post is doing financially better than what the numbers really demonstrate.
The media release, Canada Post Pre-Tax Earnings Declined Sharply in 2010
was to separate the Canada Post entity from its subsidiaries and give a clearer picture of the 2010 state of affairs.
Here is a portion of their statement:
“The Canada Post pension plan continued to pose a significant financial burden on the Group in 2010. The plan had a liability of $16 billion and a pension solvency deficit of $3.2 billion at the end of 2010. Canada Post made $746 million in cash contributions to the pension plan in 2010, including $425 million in special payments relating to the solvency deficit. As a result, Canada Post generated negative cash from operating activities in 2010.”
As you will find in the historical financial coverage of Canada Post throughout this blog, the media release issued on Canada Post’s website is consistent with those results. This is closer to the true reality of Canada Post’s current economic reality.
Canada Post was contacted by email to clarify this claim of negative cash flow and substantiate this claim using the 2010 Annual Report as the basis. They did not reply.
However, from what is publicly available, it is good to see Canada Post being proactive and clear in its current state of affairs.