Letter carriers deliver a $1 billion profit

Postal Service's quarter boosted by cost-cutting

January 08, 2003|By BLOOMBERG NEWS

WASHINGTON -- The U.S. Postal Service reported yesterday a profit of $1 billion for the first quarter of its fiscal year, 25 percent more than forecast, as the world's largest mail operation deepened its cost-cutting.

The post office cut expenses by $500 million in the quarter that ended Nov. 29 as mail volume and revenue lagged behind projections. Revenue fell $300 million short of forecasts. The Postal Service said it might surpass its $360 million profit target for the current quarter as it keeps a lid on costs.

Because of "the economy, we don't believe that we're going to generate the revenue and the volume" in the second quarter that we had projected, said Richard Strasser, the agency's chief financial officer.

The Postal Service delivered 49.3 billion pieces of mail in the first quarter, a 1.5 percent increase over the corresponding period last year, or about half the expected growth rate.

Postal officials said in September that the mail service would earn about $600 million this year as the economy recovers, the first profit since 1999. The operation lost $676 million in its last fiscal year on revenue of $66.7 billion.

The Postal Service uses the government-wide fiscal year calendar for annual financial reporting.

President Bush has set up a commission to chart a course for the Postal Service and put the agency on stronger financial footing in the face of sluggish economic growth, terrorism and the Internet. Postal unions say Bush wants to shift the post office into private hands, an allegation that administration officials deny.

The Postal Service typically earns a profit in its first and second fiscal quarters because of Christmas gifts, cards and catalog mailings, said Gerry Kreienkamp, a postal spokesman. The agency often loses money during the third and fourth quarters.

The postal agency said last month that trimming 23,000 jobs had enabled it to cut its loss for the 2002 fiscal year to almost half of the $1.2 billion its managers had expected. The agency has been able to reduce its work force, even with an increase in the number of addresses to which it delivers, because of the use of more automation in processing mail.

Postal workers delivered to 1.8 million more addresses in the first quarter of 2003 than in last year's first quarter, Strasser said. Each postal carrier delivers about 2,300 pieces of mail daily to about 500 addresses, according to the agency.

The Postal Service is trying to recover from three years of losses totaling $2.56 billion.

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