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NZ Post increased 1H profit 41%, helped by Kiwibank, sale of courier unit

New Zealand Post, the state-owned mail delivery service, increased first-half profit 41 percent after selling its Australian Couriers Please business for A$95 million and as earnings rose at its Kiwibank unit.

Net profit rose to $100 million in the six months ended Dec. 31, from $71 million in the year earlier period, the Wellington-based state-owned enterprise said in a statement. Excluding one-time items, profit rose 18 percent to $84 million, the company said. Revenue increased 2.2 percent to $879 million as expenses advanced 3 percent to $784 million.

NZ Post is looking to pare back its traditional letter-delivery service, where volumes slid 9.8 percent in the first half, with plans to move to alternate day delivery for standard letters in urban areas from July and shutter stores in favour of agency and kiosk services. The company is two years into a five-year transformation plan.

"The overall result confirmed the group was moving in the right direction, although it was still a challenge to get a return on investment in its core mail and logistics business," chief executive Brian Roche said. "The ongoing reduction of letter volumes makes it necessary for the group to maintain its focus on structural and operational change to achieve sustainable profit levels."

The company's mail and logistics business increase profit 29 percent to $31 million as revenue rose 1.7 percent to $425 million. Increased ecommerce activity pushed parcel deliveries to a record, offsetting a decline in letters.

Meanwhile the Kiwibank unit, which accounts for the bulk of earnings, increased profit 37 percent to $71 million as revenue rose 23 percent to $283 million.

Kiwibank benefited from improved net interest margin and cost containment, Roche said.

The bank's net interest income, which measures its interest expense against its interest income, increased to $179 million in the period, from $140 million a year earlier, it said.

NZ Post will pay a $2.5 million dividend to the government on March 31, unchanged from the year earlier period.

In the first half, the SOE wrote down the value of its investment in business service provider Coverga Pty by $23 million to $26 million after the business lost a major customer. It recognised a one-time gain of $47 million from the sale of its Couriers Please business to Singapore Post .