Australia Post results show business stabilised but challenges still ahead

12 October 2011

Australia Post today announced that following the launch of its business renewal program Future Ready last year, it has achieved the objective of stabilising the business with a pre-tax profit of $332.3 million, up from $253 million (before restructuring provisions) in 2009-10.

Australia Post Chairman, David Mortimer, said the result was impressive at a time when many other postal services around the world faced precarious financial positions and were implementing significant service cuts.

"This profit result is particularly encouraging given letter volumes for our reserved service fell by more than 3 per cent for the fourth year in a row, resulting in a loss of $91.3 million for the reserved service mail business," said Mr Mortimer.

"I'm especially pleased that, despite the global decline in mail, our management team have stabilised the business and have begun the work to reposition us for a return to growth in the future."

Managing Director and CEO of Australia Post, Ahmed Fahour, said that profit had increased in difficult trading conditions and had been achieved while exceeding Australia Post's Community Service Obligations. He said meeting the commercial and community obligations was testament to the hard work of 33,000 staff over the last year.

"Our revenue, up 2.8 per cent on last year, grew faster than our costs, up 1.2 per cent. This is the first time in four years that our revenue growth has outstripped our cost growth and it has been achieved while maintaining very high standards of community service, with 96 per cent of letters delivered on time or early and the number of retail outlets increasing to 4,419," he said.

"While stabilising the business is a fundamental step in our renewal, it is also crucial that we build a platform for future growth."

Mr Fahour said, with the launch of Future Ready in April 2010, the business had shifted its focus towards online shopping as the future growth engine of Australia Post, with a particular focus on helping Australian businesses get online.

"Our focus on ecommerce has been vindicated as we've experienced overall parcel volume growth of 10.9 per cent which drove parcels revenue up 5.3 per cent and resulted in a 36 per cent growth in profit over the past 12 months. This is only going to continue as online retailing in Australia continues to grow at a rapid rate," he said.

"With more and more people sending and receiving parcels, we are taking significant steps to make it convenient for Australians to send and receive parcels at a time and place that suits them and helping Australian small businesses to cash in on the online shopping boom."

Australia Post recently announced its innovative investment in the parcels business in response to the internet shopping boom. New delivery options will include the ability for customers to collect parcels from an initial 100 extended hours locations across Australia, as well as the trial of new parcel lockers available 24 hours a day, 7 days a week, with customers receiving email and SMS notifications when their parcel arrives.

Mr Fahour said Australia Post is continuing to grow the range of trusted services it offers to provide customers with greater access, convenience and choice. Australia Post experienced revenue growth of 2.8 per cent in its retail agency services and merchandise portfolio, adding 18 new identity services to the 750 business and government bodies it acts as an agent for.

"This growth in our retail portfolio is especially pleasing given the depressed retail environment and the natural disasters which have impacted many of our post offices this year," he said.

"We are trialling new self-service machines for domestic parcels and Billpay around the country, with more to come if customers find them to be a convenient addition to our stores.

"We've also announced 60 upgraded business hubs across Australia focusing on small to medium business activity, with the first to be completed by November in Melbourne."

But while there is much to be proud of, Mr Fahour said that the business is only part of the way along the path to renewal and there is still plenty to be done.

"This year's results only return us back to our 2009 profit level and, while Australia Post's commercial non-reserved service made a profit of $405.3 million, the reserved letters service still lost $91.3 million," he said.

"Letter volumes have continued to decline, with 89 million fewer articles passing through out network, so it's important that we continue to prepare the business for ongoing challenges in our traditional core markets."

Some key results from the 2010/11 Annual Report include:

  • A return to profit growth (up 31.3% on last year): with a before-tax profit of $332.3 million this financial year, compared with profit (before restructuring provisions) of $253.2 million in 2009-10
  • Strong performance in the parcels portfolio with 10.9% overall volume growth, 5.3% revenue growth and 36% profit growth
  • Letter volumes fell by more than 3 per cent for the fourth year in a row, resulting in a loss of $91.3 million
  • Handled 5.03 billion items of mail, down from 5.14 billion last year
  • Delivered to over 10.9 million Australian addresses
  • Exceeded Community Service Obligations by delivering 96% of letters on time or early
  • Increased the number of retail outlets to 4,419, up four on the previous financial year
  • Processed more than 120 million bill payments in-store and conducted in excess of four million transactions on behalf of more than 90 identity services clients<
  • Added 18 new identity and verification clients to the 750 business and government bodies that we are an agent for
  • Reached agreement for and implemented our Fair Work Agreement, with 73% of staff voting in favour
  • Total dividend payments of $173.2 million to our shareholder, the Federal Government
  • Reconfigured joint venture businesses Australian Air Express and Star Track Express to leverage the strengths of the two leading express freight brands and create two new businesses with distinct capabilities
  • Boosted strong brand position, ranking second in the 2011 AMR Reptrak brand reputation study of the 60 largest companies in Australia, and first for governance; and
  • An increase of 7.7% of women in executive positions in the last financial year to 29.1%, with 40% of the Executive Committee now women

The full Annual Report can be viewed at: http://auspost.com.au/about-us/annual-reports.html.