Australia Post Delivers Solid Revenue Growth – eCommerce Growth Expected to Stabilize

Australia Post today announced group revenue for the first half of $4.80 billion, up 10.4 percent year-on-year, driven by the strongest parcel volumes in Australia Post’s history.

The improved Group profit before tax of $199.8 million was underlined by asset sales and revaluations, as well as favorable bond rate movements.

Letters revenue of $935 million was down 1.2 percent on last year, despite the significant 2021 Census mail out. 

Operational costs which increased by 13.2 percent on last year, reflect volume increases and COVID-19 related network constraints which are likely to continue in FY23.

Capital investment during the period increased to $217.8 million, up $28.4 million on last year. This forms part of the $400 million committed to new parcels facilities, fleet, and technology by mid-2022 to help service the growing demand for services, bringing the total committed investment to more than $1 billion over three years. 

The business also committed an additional $20 million in upgrading systems to cloud-based solutions over the next year to improve parcel scanning and tracking in the network.

Australia Post Enterprise Agreements

Australia Post secured new Enterprise Agreements during the half, for more than 30,000 Award level employees, with the market-leading agreements delivering a guaranteed nine percent pay increase over the next three years for Australia Post and StarTrack team members, while also maintaining key existing terms and conditions of employment.

Parcels and Services

Parcels and Services revenue was up almost $464.5 million, or 13.6 percent, to $3.87 billion.15 million people in lockdown as a result of the COVID-19 Delta outbreak across NSW and Victoria, led to the strongest parcel volumes in the organization’s history.

Despite the network challenges associated with having thousands of team members needing to isolate during this critical time, our people continued to deliver to communities across the country. StarTrack delivered strong results, with a disciplined focus on costs and an increase in volumes. 

Letters

Letter volumes were down 0.7 percent with revenue down 1.2 percent. The continued structural decline of letter volumes and rise in delivery points for this important community service resulted in losses for the half of $69.9 million. 

Operational

Australia Post continued to generate savings from business efficiency programs implemented across the organization including head office support costs by $17.1 million.

Group expenses increased 10.2 percent, driven by additional costs incurred as the organization worked through the pandemic-related network constraints, as well as limited domestic and global air transport capacity.

Group Chief Executive Officer and Managing Director, Paul Graham, said the result was a significant achievement given the ongoing disruptions to the business during the COVID-19 pandemic and the necessary network changes required to continue to provide essential goods and services to customers.  

“Just like many businesses around the country, we have dealt with unprecedented challenges over the past year, but the ability of our people to adapt during ongoing challenges presented by the COVID-19 pandemic has been nothing short of remarkable,” 

“Together, we worked tirelessly to manage the health and wellbeing of our people, with isolation rules and travel restrictions across different states and territories all carrying different challenges – while our people remained resilient and delivered for our communities. 

“I want to thank all of our people for the spirit they’ve shown and their willingness to get the job done for our customers. It is a credit to all of our team members in processing, delivery, customer service, our Post Offices (including Licensed Post Offices) as well as our contractor partners. 

“Our retail network of more than 4,300 Post Offices continues to provide critical government and financial services, particularly in rural and remote Australia, where Bank@Post remains an invaluable service for communities.

“We had 112 million visits to our corporate and Licensed Post Offices across the country in the first half, with 20 million visits alone in December.”

Paul Graham, Group Chief Executive Officer and Managing Director, Australia Post

Outlook 

It is expected eCommerce will be more subdued in the second half while letter losses will continue, contributing to an overall loss in the next six months. Australia Post will release full-year results in September, and at this stage expects to post a modest profit while being cognisant of the ongoing uncertainty of COVID-19 and pressures facing customers.