Parcels good, letters not for Australia Post finances

Growing parcels business hit record over Christmas

Parcels good, letters not for Australia Post finances
Parcels make sense for Australia Post


Australia Post’s letters service continues to drag its financial performance down, even as parcels battle to staunch its losses.

The domestic parcels unit is the government-owned company’s biggest but its first-half gain of $25 million was overwhelmed by the $102 million lost on letters, which are part of its legislated community service obligations.

The upshot is a profit after tax $118 million, down 45 per cent.

Parcels revenue grew 10 per cent, up $147 million, "well ahead of the general retail market which grew 2.9 per cent in the period", the firm reported.

Read how Australia Post picked up all of Aramex Global Solutions, here 

Australia Post delivered a record 40 million parcels, up 12 per cent but nominates letters revenue now declining at the fastest rate in its history as its major challenge.

"Although we delivered 10 per cent growth in domestic parcels, well in excess of the growth rates of the economy and in a period of very strong competition, this could not make up for the profit decline in the letters business," group CEO and MD Christine Holgate says.

"Letter revenues are down 10 per cent or $125 million, which reduced profit by $102 million in the half.  This is after saving an estimated $50 million in delivery costs as posties carried 40 per cent of our parcels.

"Since the last increase in the Basic Postage Rate in January 2016, more than three years ago, our costs to deliver letters are up 10 per cent. The number of new delivery addresses has increased by 500,000, yet letter volumes have declined by 800 million."


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