National postal operator Australia Post has reported a net profit before tax of AUD $1.4 million for the six months to 31 December 2015, and predicts that it will return to a full year profit in 2016 after an AUD $222 million loss last year.

Group CEO Ahmed Fahour said the half year result highlighted why “reform to the letters service was absolutely necessary to ensure future sustainability of the business”.

The operator released a statement about the results which said that it expected that the changes implemented in the letters services in January this year will reduce the growing losses in the mail business.

Fahour said, “We have made a number of difficult decisions recently to help put Australia Post on the right path to take advantage of future growth in eCommerce.”

“Our financial position is significantly stronger as a result and we are further encouraged by the solid performance of both our parcels and Trusted Services businesses.

“It is essential we continue to look for new revenue streams for our business. We are working with our corporate and government customers to build on our demonstrated capabilities offered through our national network, which already includes passport registrations, identity checks, banking and payment services.

“Importantly, we have improved our service performance and will continue to maintain five-day delivery and our vast network of over 4000 Post Offices.

“We will also look to further build on eCommerce partnerships to help our customers buy and sell online, both here in Australia and also internationally. This includes joining Asian eCommerce giants JD.com and Alibaba on some of their most popular online shopping platforms, including 1688.com and Tmall.com.”

Australia Post will release full year profits in September this year.

Post Office Agents Associations Limited Director Bob Chizzoniti was not surprised at the return to profits. He said, “Globally the trend is for growing costs in letter delivery coupled with falling letter volumes, while parcel revenues are increasing.

“While no-one in the postal sector wants to see a drop in letter volumes, it is clear that volumes are in decline.”

Chizzoniti added: “The parcels business is very competitive, in particular in metropolitan areas, so it’s vital that Australia Post finds new business streams to support the post office network.

“It will be interesting to see Australia Post’s financial results for the full year, which will take into account the new two-speed letters service and the $1 basic stamp.”