Australia Post reports full-year loss of $222m

Australia Post has announced a full-year loss after tax of $222m, compared to a $116.2m profit in 2014. The company said that the loss had been “driven by the continued decline in letter volumes”. It was the first time that Australia Post has reported a loss in more than 30 years.

In its official statement issued today (25 September), Australia Post said: “Addressed letter volumes fell by 7.3%, with ordinary stamped letters falling by 10.3%, as Australians continue to switch to digital alternatives, with losses in the mail business growing to $381m.”

Group revenue remained stable at $6.37bn. Parcels revenue, which was up 3.6% to $3.21bn delivered more than half of the total revenue for the first time.

Australia Post’s  Managing Director and Group CEO Ahmed Fahour said that – despite the annual losses – the business had made progress in key areas.

“As we had forecast, this has been a challenging but crucial year of transition for our business, reflected in the numbers,” said Fahour.

“We are grateful to the government and members of parliament for supporting our reform program as it passed the Senate last week, enabling us to get on with this critical transformation.

“We continue to make headway with reforming our letters business and we are investing in the infrastructure and digital capabilities – vital to servicing the changing needs of our customers.

“We are confident we have the resources, infrastructure and support in place to manage the ongoing transition of our letters business as we become a more e-commerce-centric organisation.”

Australia Post said the parcel business had been “challenged” in a “highly competitive market where domestic freight providers are building capacity and international competitors acquiring sorting and last-mile delivery capabilities in Australia”.

“Despite increasing competition, for the first time ever our parcels business delivered more than half of total revenue. We are well positioned to continue our strong support for Australian business and consumers.”

As previously reported by Post&Parcel, Japan Post bought logistics company Toll Holdings earlier this year – and the company has a strong Australian presence.

Australia Post concluded its official statement on the full-year by highlighting some of its “ongoing investments” in e-commerce, which included:

• expanded major parcels facilities in Sydney and Melbourne, doubling processing capacity at both sites
• $125 million pledged in annualised payments over the past two years, to support the sustainability of its Licensed Post Offices and Community Postal Agencies
• the continued rollout of the 24/7 Parcel Lockers network and the introduction of extended post office trading hours and Saturday deliveries
• the further development on key strategic partnerships with Chinese companies to help grow e-commerce trade between the two countries.

Australia Post also reported that it has seen “significant growth” across the MyPost product offering, including the Digital Mailbox, with two million subscribers now registered.

Fahour reportedly told local media that the letters business was in “terminal decline” and that Australia Post is now “a parcels company more than a letters company”.

The Communication Workers’ Union (CWU) claimed that Australia Post management was “walking away from mail”, and argued that the financial results were not as bad as they first appeared – as a chunk of the $222m losses includes provisions for retraining and re-allocating staff.

The CWU national secretary, Grey Rayner,  conceded that “it is abundantly clear that the letter side of the business cannot be profitable in its current form,” but maintained that reform can be done “sensibly and without forced job losses”.

Rayner added: “The digital disruption to letter volumes we are seeing now is nothing new to Australia Post.

“This Union was working with Australia Post when it was horses and carts – our members have transformed it from a network of telegraph wires to one of fibre optics and modern precision logistics.

“We are committed to partnering with Australia Post to transform the business again because that’s the only way to guarantee secure, quality jobs for our members and a reliable, useful service for all Australia.”

The Australia Post Annual Report will be tabled in Federal Parliament later this year.