U.S. Postal Service Reports End-Of-Fiscal-Year Net Loss, Revenues Increase

As reported by PPAI Publications:

The U.S. Postal Service reported a net loss of $5.1 billion for fiscal year 2015 (October 1, 2014 – September 30, 2015). The net loss is largely due to certain statutorily mandated payments over which the Postal Service has no control. Notwithstanding the loss, total revenue was $68.9 billion for the year, an increase of approximately $1.1 billion from 2014.

“We achieved controllable income in excess of $1 billion for the second consecutive fiscal year, giving us some limited flexibility to make critical investments in the future of the organization,” says Postmaster General and CEO Megan J. Brennan. “To maintain this success we will need to continue our efforts to grow the business and drive operational efficiencies. However, we will also need the enactment of legislation that makes our retiree health benefit system affordable and that provides increased pricing and product flexibility.”

Controllable income for 2015 was $1.2 billion compared to $1.4 billion last year. Controllable income is defined as net loss excluding expenses related to the mandated prefunding of retirement health benefits, actuarial revaluation of retirement liabilities and non-cash workers’ compensation adjustments, which are factors largely outside of management’s control.

However, despite the year-over-year improvement in revenue and a second year of controllable income in excess of $1 billion, the Postal Service says that it continues to operate under substantial financial pressure, which demonstrates the need for legislative reform. Large net losses continue, and controllable operating expenses increased $1.3 billion from last year. This was the result of a combination of factors, including higher compensation costs attributable to increased benefits expenses and additional work hours partly associated with growth in the more labor-intensive shipping and package business.

“Adding to the financial pressures that the Postal Service will face in the short term is the fact that the exigent surcharge authorized by the Postal Regulatory Commission in 2014 will need to be rolled back in approximately April of 2016,” says Chief Financial Officer and Executive Vice President Joseph Corbett. “This surcharge has provided an additional estimated $3.5 billion in revenue since its inception, and will provide a total of $4.6 billion in additional revenue at the time when the commission will require us to eliminate the surcharge.”

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.