The United States Postal Service ended the second quarter of fiscal 2015 (January 1, 2015 to March 31, 2015) with an operating revenue increase of $223 million, or 1.3 percent, over the same period last year. The organization, however, also recorded a net loss of $1.5 billion for the quarter (all figures in US dollars).
The increase in operating revenue was driven by a 14.4 percent growth in shipping and package volume. The net loss for the quarter was $1.5 billion compared to a net loss of $1.9 billion for the same period last year. Excluding a retiree health benefit prefunding expense, the net losses would have been $44 million and $447 million, respectively, for the quarters ended 2015 and 2014.
Operating expenses declined by $160 million from the same quarter last year driven in part by what the USPS describes as favorable trends in workers’ compensation expense. Controllable income in the second quarter was $313 million, an increase of $52 million over the same period last year. Controllable income is defined as net income excluding retiree health benefits prefunding expense and expenses for interest rate and other non-cash workers’ compensation expense, which are factors outside of management’s control.
“We’re pleased with the increase in our controllable net income compared to the same period last year, which demonstrates that our cost containment and revenue strategies are delivering results,” said Postmaster General and Chief Executive Officer Megan Brennan.
First-Class Mail and Standard Mail volumes declined 2.1 percent and 1.1 percent, respectively, during the second quarter compared to the same period last year. For its most recent quarter, total mail volume of 37.7 billion pieces declined by 420 million pieces from 38.2 billion pieces for the same period last year.
“Shipping and package services are a key business driver, however, operating margins in this business are lower than in mailing services,” said Chief Financial Officer and Executive Vice President Joseph Corbett. “And, while we’re pleased to see a small increase in controllable income, to improve our margins, we’ll need to make investments in our network infrastructure and delivery vehicles.”
The Postal Service ended the quarter with $6.1 billion in unrestricted cash, representing 22 days of operating cash. The USPS explains, that because it has reached its borrowing limit of $15 billion, the current level of available liquidity is not sufficient to support both operations and prefund retiree health benefits.
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