Revenue in the U.S. Postal Service's third quarter continued to fall below plan due to stagnant mail volumes, Richard Strasser, chief financial officer and executive vice president, told the agency's Board of Governors at its regular monthly meeting this week in Washington.
Revenue from Feb. 22 to May 16 was $483 million below plan at $16.04 billion. Expenses were $15.82 billion, $370 million under plan. Net income for the quarter was $224 million, $112 million under plan.
“The revenue shortfall to plan was greater than our ability to offset through increased expense reductions,” he said.
Still, net income for the year is $1.87 billion, $373 million over plan.
The financial performance does not include the effects of the recently enacted Postal Civil Service Retirement System Funding Reform Act of 2003. When included, Strasser said, “The net income through Quarter 3 is $4.5 billion, of which at least $3.5 billion must be used to pay down debt, according to the law.”
Mail volume figures made clear the reason for the lack of revenue growth. Volume failed to grow for the second quarter in a row. First-Class volume dropped 2.4 percent compared with last year's third quarter. Standard Mail increased 3.2 percent, but that was less than the 3.5 percent growth forecast.
In his outlook for the end of the fiscal year this September, Strasser projected that revenue and volumes would not meet plan. But with stringent expense reductions, net income for the year (excluding the effect of the CSRS funding change) would exceed the planned $600 million, he said.
This is one of the last times the USPS will report data based on its 13 accounting periods. The agency switches to monthly reporting of data in fiscal year 2004.