With one month left in FY 2015, USPS operating profit stands at $1.3 billion

The US Postal Service reported an unaudited operating loss of $61 million for the month of August. That brings the year to date operating surplus to $1.265 billion, down from the $1.448 billion profit at this point last year. Those numbers exclude the non-cash bookkeeping entries the USPS makes to comply with the 2006 PAEA law, which will turn the surplus into paper “losses” of $375 million for the month, and $4.1 billion for the year to date.

Monthly revenue was down by 2.9% from last August- year to date revenue is down 1.5%. Expenses, however, have continued to rise, up 3.2% for the month, and 1.9% for the year to date. Employee compensation costs (excluding PAEA charges) have risen by $1.3 billion compared to last year.

Total mail volume for the month declined 4.3% from last August, while revenue from mail dropped by 6.5%. Year to date, mail volume is down 1.3%. (Year to date volume reflects the spike in Standard Mail volume last October in advance of the mid-term election. Last year’s political mail is also probably responsible for a portion of the August volume decline.). Package and shipping services volume was up 14.4% for the month. The increase in package revenue came to $115 million for the month, not enough to offset the $275 million drop in mail revenue. Year to date, however, total revenue is still running ahead of SPLY by almost a billion dollars, thanks to the increase in packages, and a 1.3% YTD increase in Standard Mail revenue.

While the continued increase in package volume and revenue is good news, the fact is that packages are more expensive to process and deliver than letters and flats- that’s part of the reason why expenses are growing even as overall volume (mail+packages) declines.

Another concern is the continuing change in the makeup of the mailstream. So far this year, 56% of mail volume is Standard Mail, up from 53% a year ago. With revenue per piece of around 22 cents compared with 46 cents for first class, that adds additional pressure to cut costs as the lower priced product is less able to “piggyback” on the more profitable First Class.