Purolator Inc.

2016 Annual Review

2016 was a tale of two very different halves at Purolator. In the first half of the year, the company continued to struggle with a significant volume decline of 7 per cent. To put this number into perspective, in 2009, at the tail end of the Great Recession, Purolator’s shipments declined by 6 per cent. This decline combined with the timing of large capital expenditures and execution issues related to a number of transformational projects – collectively termed PuroNext – had the outlook for the year appearing far from bright. The team reacted with cost-containment initiatives, with a major focus on overhead and operational productivity.

As we ended Q2, two material changes contributed to the business improvement: the threat of a Canada Post labour disruption and the acceptance of more e-commerce business into our network. New volume growth of 11 per cent in the second half, coupled with the cost-containment initiatives throughout the year, allowed us to achieve a better-than-expected year-end EBT of $67M.

As Purolator’s new CEO, I came in at a remarkable time. Purolator has a tremendous brand, network, customer service culture and a great, talented, committed team. The company has a proud history as a market leader in the business-to-business express courier market. Our challenge is to aggressively adapt the legacy business to continue to win in a very dynamic market. E-commerce is accelerating the transformation of business at an incredible pace. While Purolator’s well-known reliable service resonates well with customers across both B2B and B2C channels, our value proposition will become even stronger as we continue to improve the company’s cost structure. In 2016, we outlined the major business improvement areas that will boost performance and set up the company for long-term success.

From my point of view, Purolator is an operating company that requires focus and execution. While finishing 2016 strong, we stayed highly focused on the major business improvement initiatives to ensure our ongoing success. Our collective bargaining process was in full flight throughout the year, as we worked to establish more flexibility to adapt to the dynamic market and customer expectations. The network optimization program also began to ramp up, which will rationalize our hub and terminal network to ensure a flexible, competitive cost structure for the business.  

Complementing our operational and organizational enhancements, our commercial team made great progress in the year. By organizing our team around new growth and protecting and retaining our base with a strong yield and pricing discipline, we delivered more profitable growth. Our Purolator International team also contributed to our growth with some very unique cross-border and international solutions.

As we finalize our five-year strategy going into 2017, I have outlined a five-point plan to the company as foundational to our future success:

  • Aggressively restructure to operate profitably at the current demand and changing market shift
  • Build a continuous improvement philosophy and culture
  • Delight customers - relentless pursuit of superior customer service
  • Drive accountability for delivering results and satisfying our customers
  • Work together effectively as one team

We will continue to lead with a theme of focus and execution as we strengthen our foundation to prepare for the growth to come. Providing exceptional service, maintaining our strong health and safety culture, building strong client relationships, controlling costs and developing our talent will be key focus areas for the next year. Despite the ever-increasing pace of change in the industry, we are optimistic about Purolator’s future. The actions we took in 2016 just scratched the surface of the opportunity we see within. We are confident we will not only make Purolator stronger but will unlock significant value for our customers, employees and shareholders. 

John Ferguson
President and Chief Executive Officer