Australia Post increases profit by 16.6 per cent to $281 million - announces $2 billion transformation investment

11 October 2012
  • Group profit of $281 million and strong profit growth of 16.6 per cent - the second year of profit growth under the current "Future Ready" strategy.
  • Regulated mail business losses widen to $148 million on the back of mail volume and revenue declines.
  • Strong performance in parcels and retail produces profit of $546 million in the non-regulated business, on the back of 8.5 per cent revenue growth.
  • $2 billion investment program in Australia Post's infrastructure, products and services in support of the digital economy.

Managing Director and CEO Ahmed Fahour today announced that Australia Post will invest more than $2 billion to transform its national logistics network and create a universal digital platform to deliver the modern communication services Australians are demanding.

The investment will create a world class parcel delivery network that will improve automation and expand Australia Post's footprint across Australia, deliver convenience and choice in parcel delivery for both consumers and business, expand our network of retail superstores across the country and make available a secure, free, personalised Australia Post Digital MailBox to every Australian.

Australia Post Managing Director and CEO Ahmed Fahour said:

"This is the single largest investment in the network in Australia Post's more than 200 year history and will significantly expand the capacity of our parcels network, making it world class. Without this investment, we cannot sustain the enormous demand for parcel services and continue the high level of service and reliability we've always delivered to Australians. This investment will provide the infrastructure and delivery options to ensure Australian businesses and consumers can reap the benefits of the digital economy.

"An investment of this magnitude is only possible due to continued strong profit growth of 16.6 per cent in 2011/12 which has been achieved through disciplined cost management, innovation in our retail products and services and the continued growth in online shopping driving parcel delivery. This focus has helped Australia Post deliver a profit after tax of $281.2 million for 2011/12 and deliver a dividend to the Australian Government and community of $213.7 million."

Australia Post's 2011/12 Annual Report was tabled today in Federal Parliament and showed continued profit growth, despite a difficult economic climate and the continued decline in mail volumes. In line with expectations, Australia Post's regulated mail business losses widened to $148 million in 2011/12 as Australians continue to turn to online communications.

"We recognise that the demand for physical mail services will continue to decrease and while our parcels business is growing, increased competition and the fixed costs associated with maintaining our national mail network will challenge our ability to continue to grow and invest in the future," Mr Fahour said.

"This $2 billion investment in modernising our parcels & retail network and the launch of our new digital channel, the Australia Post Digital MailBox later this month, are aimed at future-proofing our business and underpinning our ability to deliver the services Australians want, need and can afford into the future.

"Over the next four years, this investment will ensure that Australian consumers and businesses have real choice and convenience in parcel delivery, thanks to improved automation and tracking technology. Continued investment in 24/7 parcel lockers and retail superstores will also mean that by 2014, 80 per cent of Australians in metropolitan areas will be within 10 minutes drive of an after-hours parcel collection location."

Online shopping continues to grow in Australia, with local consumers spending a total of $11.9 billion in online retail sales in the last year - an increase of around 22 per cent, year on year. In good news for local e-tailers, more than 70 per cent of these items are purchased through local online retailers .

This growth in demand for parcels has resulted in Australia Post operating at peak levels throughout the year, not just at traditional peak demand times such as Christmas.

"This year we will invest significantly to ensure we deal with the Christmas rush effectively. Last year we delivered more than three million parcels in December alone. This Christmas will be even busier," Mr Fahour said.

"We want to ensure that we are doing all we can to give Australia retailers and e-tailers the competitive edge this Christmas and we will work with them to help them meet their customers' expectations this holiday season."

This Christmas Australia Post will:

  • Deliver parcels to households on weekends in November and December.
  • Extend opening hours for parcel collections at retail outlets.
  • Extend our retail trading hours at more than 450 retail outlets during the Christmas period.
  • Extend our weekday operating hours for our call centres.
  • Improve service levels for our business customers by extending our hours of processing and transporting.

Australia Post's transformation will continue later this month when it launches the Australia Post Digital MailBox where consumers will be able to securely receive and pay bills and store important documents and communications, safe in the knowledge their information is being protected by one of Australia's most trusted brands and backed by a secure, Australian based cloud service.

"Just as the traditional letterbox has been a vital part of people's communications for the past two hundred years, we think the Australia Post Digital MailBox will become an integral part of everyday life," said Mr Fahour.

"All of these initiatives will ensure Australia Post remains the cornerstone of the community, as well as giving Australian consumers and businesses every opportunity to reap the benefits of the digital economy."

For further details about Australia Post's Annual Results and investment initiatives, please see below.

Total Australia Post results

2012
($m)
2011
($m)
% Change

Income ($m)

5126

4986

2.8%

Operating EBIT*

398

329

21.0%

Profit After Tax

281

241

16.6%

Dividends declared

214

173

23.4%

Net cash from
Operating Activities

551

407

35.3%

Segment Operating* Results

2012
($m)
2011
($m)
% Change

Regulated Mail Operating Result
• Income
• EBIT

1924
(148)

1950
(123)

(1.3%)
(20.3)%

Non-regulated Parcel and Retail
Operating Result
• Income
• EBIT

3073
546

2831
452

8.5%
20.8%

Total Group Operating EBIT

398

329

21.0%

* Note: Excludes unallocated group items and inter-company eliminations (page 93 of 2012 Annual Report) 

 

Key initiatives announced

Parcels and e-commerce

Convenience and choice for consumers

By 2014, 80 per cent of Australians in a metropolitan area will be within 10 minutes drive of an after-hours parcel collection location whether that is at a retail outlet with extended trading hours, new customer collection locations, PO Box Parcel Lockers or through the national rollout of the Australia Post 24/7 Parcel Lockers.

By the end of the year there will be 128 parcel locker locations across Australia. Australia Post will commence a national rollout of 24/7 parcel lockers, with 250 locations in total over the next two years, more than 48 of which will be in place by the end of 2012. Consumers can subscribe to the free service which will send an SMS or e-mail message when a parcel is ready for collection.

In addition, by the end of 2012, parcels lockers for exclusive use by post office box customers will also be in 80 locations across the country.

24/7 Parcel Lockers are currently available at:

  • Brisbane GPO (Qld)
  • Melbourne Bourke Street Superstore (Vic)
  • Moorabbin Business Hub (Vic)
  • Cranbourne Delivery Centre (Vic)
  • St Kilda Delivery Centre (Vic)
  • Parramatta CBD Post Office (NSW)
  • St Leonards Delivery Centre (NSW)
  • Stockland Balgowlah Shopping Centre (NSW)
  • St Georges Terrace Superstore (WA)

24/7 Parcel Locker locations by the end of 2012:

ACT
Canberra GPO
South Canberra
Tuggeranong

SA
Brighton
Kent Town
Marleston
Melrose Park
Regency Park

VIC
Bayswater
Braeside
Burwood
Deepdene
Ferntree Gully
Fitzroy
Hoppers Crossing
Melbourne University
Mentone
Nunawading
Port Melbourne
St Albans
Sunbury
Somerton

NSW
Leichhardt
Macquarie Park
Queen Victoria Building
Silverwater
Taren Point

WA
Bassendean
Bentley
Canning Vale
Gwelup
Joondalup
Palmyra

QLD
Bundall
Capalaba
Cooraparoo
Ferny Hills
Mansfield
Toowong

Expanding our network

We will invest to expand our current facilities and create new sites with world-class machinery and systems creating the capacity to deal with seasonal demand (such as Christmas). Intelligent conveyor systems will be installed to enable us to process more parcels per hour and to reduce double handling. Over the next two years we will increase automation and expand our activities in Sydney, Melbourne, Brisbane, Adelaide and Perth.

Australia Post will implement a fully automated track and trace parcel system. A whole of network view will enable us to identify the location of every barcoded parcel at any time. This means customers will know exactly where their parcel is from start to finish and can check the status of their parcel at any time.

We're also committed to expanding our range of products and services to meet the growing needs of our customers who buy and sell online. One example is the provision of a cost effective international parcel service - Pack and Track International - to the UK, US, NZ, Ireland and Singapore, which enables tracking for only $6 extra than regular airmail, a significantly cheaper alternative for local businesses to access key international e-commerce markets.

Acquisition of Star Track

Subject to regulatory approval Australia Post will become the sole shareholder of StarTrack, a company we have had a 50 per cent interest in since 2003. StarTrack represents a critical strategic investment for Australia Post and offers significant express freight capabilities and products which are complementary to those currently offered by our international and domestic parcels network. The significant IP and technology investment in StarTrack will accelerate our ability to cater for future growth in parcels.

Managing peak periods

We are investing in our business to ensure we deal with the Christmas rush effectively by:

  • delivering parcels to households on weekends in November and December
  • extending opening hours for parcel collections at retail outlets
  • extending our retail trading hours at more than 450 retail outlets during the Christmas period
  • extending our weekday operating hours for Customer Contact Centres
  • improving our service levels by extending our hours of processing and transporting.

Build and grow the Australia Post Digital MailBox

Australia Post will formally launch its Digital MailBox this month which will be available free to all Australians. The MailBox will enable consumers to receive and pay bills, track and manage their relationships with their providers and store all of their important documents in one place. It's easily accessed with one password, from any internet enabled device, 24/7, from anywhere in the world. But most importantly, Australians can trust that their information is safe, stored securely in an Australian based cloud, provided by Telstra.

Retail Superstores

By the end of 2012 Australia Post will have flagship superstores in each state around the country. The new superstores bridges the divide between physical and online shopping with Apple Macs, iPads and digital screens available for customers to shop or research online, arrange their parcel delivery electronically and navigate key products and services.

Superstores locations for 2012:

ACT
Canberra GPO*

SA
Adelaide Rundle Mall*
Mt Gambier
Murray Bridge
Oaklands Park

NSW
Sydney Queen Victoria Building*
Centro Bankstown
Gunnedah
Mount Druitt
Nowra
Queanbeyan
Shellharbour City Centre

TAS
Launceston*

VIC
Melbourne Bourke Street*
Melbourne Collins Street West
Warrnambool

QLD
Brisbane GPO*
Australia Fair
Beenleigh
Brookside
Cairns
Caloundra
Capalaba
Cleveland
Loganholme
Robina
Townsville

WA
Perth St George's Terrace*
Cannington
Rockingham
West Perth

 * Flagship superstores

Business Hubs

We currently have 23 Business Hubs open across the country, and plan to have 31 open by early 2013.

Business Hub locations currently open:

Business Hubs opening early 2013:

NSW
Kingsgrove
Hunter
Seven Hills
Wollongong
Alexandria
Ingleburn
Macquarie Park
Frenchs Forest
Nepean

ACT
North Canberra
South Canberra

QLD
Archerfield
Nambour
Mansfield
Brendale
Bundall

NT
Winnellie

SA
Salisbury South
Lonsdale
Adelaide

WA
Bibra Lake
Osborne Park
Wangara

TAS
Hobart

VIC
Somerton
Hoppers Crossing
Mount Waverley
Moorabbin
Seaford
Preston
Nunawading
Bayswater