New Zealand Post has reported a much improved operating profit but the improvements hide some challenges the government-owned enterprise continues to face.
Chief executive Brian Roche also warned the Government the company was being restrained by legislation designed before the digital revolution.
The company reported earnings before interest and tax of $204.7 million for the year ended June, a vast improvement on the $25 million loss reported in the previous corresponding period (pcp).
Reported profit was $169.7 million, compared with a $35.6 million loss in the pcp.
However, Kiwibank, which is owned by NZ Post, earlier this week reported ebit of $111 million, up from $32 million in the pcp and the after-tax profit was $79 million, up from $21 million.
Those improved profits would have flowed straight on to the bottom line for NZ Post.
A bounce-back by Kiwibank, a substantial one-off non-cash gain resulting from the acquisition of DHL's 50% share in the joint venture courier and logistics business Express Couriers and the continued fall in postal revenues were features of the result.
Mr Roche said the reported after-tax profit must be considered in context of NZ Post's core postal business, which continued to decline in both revenue and volume.
"Kiwis posted 54 million fewer letters in the past year, contributing to a decline in letters revenue of $17 million."
Excluding for one-off adjustments, the reported profit was $79.8 million compared to $41.7 million in the pcp.
An accounting adjustment added $96.2 million to the reported profit resulting from the acquisition of DHL's share in Express Couriers.
Mr Roche said the postal business was benefiting from improvements to product and service offerings, careful management of costs and continued improvements to the operating model.
The accounts showed that while total revenue rose 4% to $1.31 billion, expenditure fell 6% to $1.22 billion.
However, Mr Roche warned NZ Post had exhausted short-term fixes.
"The continuing volume and revenue decline in our traditional core business was further evidence we must proceed with fundamental change."
The purchase of Gareth Morgan Investments had greatly improved the group's existing Kiwisaver offer and extended its investment management capability, he said.
NZ Post now had a totally-owned courier and logistics company which was able to take advantage of the growth in the parcels and logistics markets.
Much of the work to "clear the decks" of non-performing non-core businesses had also been completed, enabling NZ Post to concentrate capital investment in New Zealand-based financial, postal and digital services.
"It is imperative NZ Post has the regulatory certainty to allow us to adapt to present market conditions and to plan for the future. We are currently constrained by the 1998 Deed of Understanding committing us to service obligations and network designed pre-dating the digital revolution."
