Letter losses drive Australia Post profit decline in H1

Australia Post has announced its financial results for the first half of its 2015 financial year ended December 31, 2014. It reported profit after tax of $98m, a decline of 56% on the first half result of the previous year.

The fall in profit was driven by growing losses of $151m in the letters business, which was 57% worse than the loss recorded by the letters business in the first half of its 2014 financial year. Letter volume decline accelerated to 8.2%, year-on-year, which is the largest decline recorded since Australia Post’s letter volumes started falling in 2008.

Ahmed Fahour, Australia Post’s Managing Director & group CEO said the half-year result highlighted the urgent need for regulatory reform of Australia Post’s letters service to ensure a stabilised mail service for the future. “The immediate challenge for our business is clear. We have been carefully managing the real decline in our letter volumes for the past seven years. But we have now reached a tipping point where we can no longer manage that decline, while also maintaining our nationwide networks, service reliability and profitability,” he said.

“We urgently need reform of the regulations that apply to our letters service. A government-commissioned external report last year predicted that – without reform – Australia Post will incur $12.1bn cumulative losses in letters, and $6.6bn for the enterprise over the next 10 years. This year we are forecasting a full-year loss for the first time. It is urgent we make changes this year to ensure we can continue to maintain a reliable, accessible postal service for all Australians,” added Fahour.

Australia Post is seeking government approval to change its regulations to enable it to introduce a new Regular letters service for non-urgent consumer mail delivered two days slower than the current schedule. Customers wanting to use the existing timetable could then pay more for a priority service. Australia Post also wants the ability to adjust prices to better reflect the real cost of running the letter service.


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