Australia Post morphs into parcels operator

Australia Post Group profits fell by 67% for the full year 2019, from AUD $126 million to $41 million. The postal operator attributes this to mail volumes plummeting.

Letter revenues in the financial year fell by 9% to $2.2 billion. Losses increased to $192 million. Fixed costs in letter delivery grew, even as there has been no increase in the Basic Postage Rate in more than three years.

“It is important letter pricing is addressed responsibly to ensure essential community post services are protected. Without an increase to the Basic Postage Rate, Australia Post will no longer be able to afford to fully subsidise the losses from the important post business, which would risk the closure of community post offices and a reduction in services,” Ms Holgate added.

“Australia Post is absolutely committed to honouring our community obligations and appreciates the essential role we play in communities, but urgent help is required.”

Parcel volumes buoyed Australia Post however, accounting for 68% of total revenue and growing to around $4.8bn. The company may better be described as a ‘parcel delivery operator’ as letters now only account for 32% of its business.

Domestic parcel revenues grew 9.2% to just under $3.2bn as the postal operator consolidated its lead in the market. International parcel revenues meanwhile grew 15.7% to $586 million. Meanwhile financial services and identity services generated $500 million between them.

“This year we saw record domestic and international parcel revenue as more and more customers are choosing Australia Post as their preferred partner to deliver their e-commerce ambitions,” said Australia Post Group Chief Executive Officer and Managing Director Christine Holgate.

“We also signed the historic community agreements this year, first with Commonwealth Bank, NAB and Westpac, and now more than 70 financial institutions have signed on. The Community Representation contribution will enable customers to continue to conduct essential banking transactions in 3,500 Post Offices across Australia using the service.”

Australia Post forecasts growth in revenues for the next year, though this will be impacted by further declines in letter revenues.

“As a business it is critically important we remain focussed on growth opportunities – to do this we must continue to adapt and evolve to support our changing customer requirements. This includes opening the largest parcel processing facility in the Southern Hemisphere in late 2019, as well as launching new customer innovations, while we continue to keep a tight internal focus on costs.” Ms Holgate said.

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