Australia Post’s parcel business continues to grow but a decline in letters has dragged down the company’s half yearly profit.
For the six months to December 31, 2018, AusPost made a profit before tax of $154 million, down 36 per cent year-on-year.
Letter revenues were down 10 per cent or $125 million, which reduced profit by $102 million in the half.
Group revenue flat against last year at $3.6 billion.
Domestic parcels performed strongly with revenue growing by 10 per cent, up $147 million, well ahead of the general retail market which grew 2.9 per cent in the period.
The carrier expects to make a “modest” full-year profit in FY19 given the continued impact of letter decline, economic headwinds and a traditionally quieter second half.
Group CEO and MD Christine Holgate said she was pleased with the continued strong performance of the parcels business, however significant challenges remain for Australia Post with letters revenue now declining at the fastest rate in its history.
“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,” Holgate said.
“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.”
Despite the decline, Holgate noted that Australia Post still provides a critical service and is expected to deliver more than two billion letters to almost 12 million homes and businesses this year.
Holgate said the organisation was continuing to make progress on a $64 million of investment in the operational network, including new processing equipment in Sydney, Melbourne and Brisbane enabling automated sorting of an additional 100 million parcels.
During the half it also took full ownership of Aramex Global Solutions, which provides end-to-end cross-border logistics and ecommerce solutions, to support its international growth strategy.