Postmaster General and CEO Megan J. Brennan and Finance and Planning Vice President Luke Grossmann hosted a telephone/Web conference call to discuss the financial results in more detail. The call at 9:00 am ET on May 11, 2018, was open to news media and all other interested parties.
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Press Release – May 11, 2018
U.S. Postal Service Reports Second Quarter 2018 Results
- Revenue growth fueled by growing package business
- Decline in letter mail continues – primary source of revenue
- Return to financial stability requires continued management actions combined with urgently needed legislative and regulatory changes
WASHINGTON — The U.S. Postal Service reported total revenue of $17.5 billion for the second quarter of 2018 (January 1, 2018 – March 31, 2018), an increase of $235 million, or 1.4 percent, compared to the same quarter last year. Shipping and Packages revenue grew by $445 million, or 9.5 percent, while First-Class and Marketing Mail revenue fell by a combined $181 million.
The Postal Service’s results for the quarter continued to reflect multi-year trends of growth in Shipping and Packages volume and declining letter volumes, as package volume grew by 69 million pieces, or 5.0 percent, while mail volumes declined by 700 million pieces, or 2.1 percent, compared to the same quarter last year.
“Despite growth in our package business, our financial results reflect systemic trends in the marketplace and the effects of an inflexible, legislatively mandated business model that limits our ability to generate sufficient revenue and imposes costs upon us that we cannot afford,” said Postmaster General and CEO Megan J Brennan. “America needs a financially strong Postal Service that can invest in its future and can continue to fulfill the needs of American businesses and consumers. With continued aggressive management and greater legal authority to respond to changes in our marketplace and to control our costs, the Postal Service can return to financial sustainability.”
The controllable loss for the quarter was $656 million, compared to controllable income of $12 million for the same quarter last year. This change to controllable loss was driven by a $236 million increase in the controllable portion of the normal cost of retiree health benefits due to changes in actuarial assumptions and a $364 million increase in compensation expenses due to additional hours incurred to support the labor-intensive package business as well as contractual wage adjustments. Additionally, transportation expense grew by $155 million due to highway contract rate inflation as well as higher fuel costs.
Total operating expenses were $18.8 billion for the quarter, an increase of $1.0 billion, or 5.7 percent, compared to the same quarter last year. In addition to the controllable expenses referenced above, unfunded retirement and retiree health benefits grew by a combined $766 million due to changes in actuarial assumptions. Workers’ compensation expense declined by $658 million compared to the same quarter last year, resulting primarily from changes in interest rates.
Net loss for the second quarter totaled $1.3 billion, compared to a net loss of $562 million for the same period last year.
“The continued secular decline in First Class mail, rising costs and legislative and regulatory constraints resulted in larger losses this quarter,” said Chief Financial Officer Joseph Corbett.
Complete financial results – Form 10-Q