By 3 News online staff
Kiwibank earnings were the major driver for NZ Post this year, which posted a 34 percent increase in profits, but it still faces the problem of dropping letter volumes.
In its full-year annual results for 2015, released today, the state-owned enterprise reported a $143 million net profit after tax, which is $36 million more than the last financial year.
Underlying profit after tax was $128 million, just over 3 percent higher than the previous year.
Chief executive Brian Roche says the result was "pleasing", given the market conditions.
The company is currently in its second year of a five-year "reset strategy".
Mr Roche says Kiwibank's strongest result yet of after-tax profit of $127 million delivered its first ever dividend in the 2015 financial year to NZ Post.
The result is 27 percent higher than last year's $100 million.
Profit was also helped by the sale of Australian-based company Couriers Please for AU$95 million, with a gain on the sale of $46 million.
But despite the profit, the core business of letter sending which will continue to drop and competition in all markets means the company will "have to move faster again this year to maintain positive momentum", Mr Roche says.
"We still have some way to go to put our mail and logistics business on a sustainable footing.
"We will have to keep innovating and driving further reduction in operational and support costs so that we can do more than hold our own, and transform ourselves in the eyes of our customers."
Letter volumes dropped 10 percent last year and are expected to keep falling by at least that amount annually.
In the past year, the company has already made a number of changes including moving to alternate-day delivery of standard mail in 30 cities and towns as well as centralising mail processing centres from 55 to three.
Moving to alternate-day delivery has saved the company up to $35 million.
Kiwibank chief executive Paul Brock says the bank now has 900,000 customers, equating to around one-in-five New Zealanders.
"While we continue to attract more customers, the way they interact with us is rapidly changing with around 89 percent of all our service transactions already being completed via digital channels," he says.
One of the major events during the financial year was the opening of a new regional office in Hastings, expected to result in up to 200 jobs for the region over the next three years.
It is also looking at operating out of local businesses to help manage the bank's services on their behalf.
"The branch changes are designed to ensure our services and reach into communities is retained whilst acknowledging the changing way in which customers are interacting with us," Mr Brock says.
The EPMU says the profit shows the time is right to stop cutting costs and rebuild the company.
Union organiser for NZ Post workers Joe Gallagher says while the whole industry is changing, the company is in a strong position to start investing in the workforce and their services.
He says hundreds of jobs have been cut from the company over the past few years.
"We don't want to see any more jobs go, and we don't know where there's any more room to cut," Mr Gallagher says.
He says there are opportunities in the parcels and logistics business NZ Post could make the most of.