Australia Post: There are irreversible challenges confronting us
Australia Post has announced its 2024 financial year results, reporting a pre-tax loss of $88.5 million, compared to last year’s $200.3 million deficit.
This improved performance is due to the implementation of its Post26 strategy and first phase reforms, which are focused on delivering a simplified and sustainable business while reducing costs and improving services.
The Letters business faces ongoing challenges as fewer customers send letters, and foot traffic to Post Offices has continued to decline. The two-speed nature of the business is becoming even more pronounced with revenue from Parcels continuing to grow, increasing by 3.3% in FY24.
Australia Post is delivering on its Post26 strategy, with disciplined cost management and ongoing simplification of the business. Productivity improvements under Post26 drove business efficiencies of $268.9 million in FY24, up from $236.7 million in the previous year. Despite significant inflationary and other economic pressures, this cost reduction was achieved while still investing $306.1 million in new facilities, technology and fleet.
The first phase of modernisation reforms took effect in April 2024 and Australia Post expects to see improved financial sustainability across the medium term. This year, the estimated cost to deliver Australia Post’s regulated Community Service Obligations increased to $447.0 million, up from $442.2 million in FY23 and is entirely self-funded.
Performance for the full year to 30 June 2024
• Group revenue $9.13 billion, up 1.8% from FY23 ($8.97 billion)
• Group loss before tax $88.5 million, improved from $200.3 million loss in FY23
• Parcels and Services revenue $7.42 billion, up 2.3% on last year ($7.25 billion)
• Letters volumes 1.76 billion, down 12.9% on last year (2.02 billion)
• Losses in the Letters business of $361.8 million, down 5.8% from FY23 ($384.1 million)
• Business efficiencies of $268.9 million realised in FY24, up from $236.7 million last year
• Estimated cost of Community Service Obligations: $447.0 million
Outlook
Group Chief Executive Officer and Managing Director Paul Graham said that while it’s pleasing to see improved business performance, Australia Post is still staring into structural challenges that are not going away.
“Our Post26 strategy and the historic phase one modernisation reforms have put the business on the right track, and we’re now starting to see green shoots as we turn around the business.
“There are irreversible challenges confronting us, including the decline of letters and the shift from over-the-counter transactions to digital services. I’m pleased the things we do have control over, such as simplifying our business, removing complexity and cost, driving efficiencies and careful expense management, have driven the improved financial performance for the year.
“We are focused on our customers and providing them with more flexible and reliable parcel deliveries, new and innovative services across our enterprise, greater online accessibility through our market-leading app and a better customer experience online and in our retail outlets.
“I’d like to thank our extended workforce of more than 64,000 team members, who deliver for our customers and communities across every corner of Australia, every single day.
“The first phase of modernisation, including the change to our Letters business, is progressing well. We continue to work closely with our union partners to implement this across our network. We are also focused on transforming our Post Office retail network alongside our valued licensees, as we work to ensure appropriate compensation for the services they provide, particularly Bank@Post.
“The shifting banking landscape, along with the increased cost of doing business, means Bank@Post is heading towards losses over the medium term unless our bank partners provide additional funding. As Australia Post serves more banking customers, we must reconsider our increased compliance, safety and security measures for customers and our team members.
“The changes we’ve made to the business are a significant step in the right direction for our customers, our team members, and the broader community.
However, there is more work to do and further reform is required to ensure Australia Post is sustainable and delivers for communities for another 200 years,” Mr Graham said.
