New Zealand Post has announced a six month after tax profit of $110 million. But it has voiced fresh concern about its mail and parcels business.
The net profit was up 10 percent on a year ago, and included the one-off effect of the sale of its Australian subsidiary Converga.
The underlying after tax profit was $74 million, down $12 million on the same period a year earlier.
Chief Executive Brian Roche says the Kiwi Group Holdings, which includes Kiwibank, Kiwi Insurance and Kiwi Wealth is "progressing well" despite a "volatile market".
But he says the mail and parcels result was "below expectation" and "continues to give rise to concerns as to its ongoing financial performance".
"The postal services business continues to be challenged by tough market conditions. During the last 12 months letter volume fell by about 60 million units and while we have significantly reduced costs we have not kept pace with the rate of decline.
"We will continue to make necessary changes so that the nationwide letters network runs sustainably, including pursuing further cost savings.
He says New Zealand Post needs to grow revenues to offset the $20-$30 million Kiwi Group is losing every year from lower letter volumes.
Mr Roche says some progress has been made with the parcels business.
"A highlight was a 7 percent increase in parcel volumes during the pre-Christmas period (November and December) compared with the previous year".
He says management is looking at "further cost reduction".
Revenue for the six months was $766 million, down from $836 million in the six months to December 2014. That included the sale of CouriersPlease.
Profits for its financial services unit (which includes New Zealand Post) were up by one million dollars to $73 million.
New Zealand Post will pay the Government a dividend of two and a half million dollars.