Australia Post has announced its first half of the 2023 financial year (1H23) results, which revealed that revenue was $4.69 billion, down 2.4 per cent from a year ago, largely driven by an ongoing decline in letter volumes.
The results showed that its profit before tax of $23.6 million was considerably lower than the prior corresponding period – largely the result of a record first-half letters loss of $189.7 million, compared to $69.9 million in the first half of the 2022 financial year.
It said Australia Post has been flagging “significant structural headwinds” for several years.
It said that during COVID-19, the parcels business experienced a temporary surge, which masked the underlying challenges the business has been facing. With lockdowns ending and e-Commerce volumes moderating, it said the challenges of the business are now more visible.
Letters revenue continued to decline, falling 5.7 per cent compared to the same time last year, despite the benefit of a number of one-off mail outs, including state election materials, cyber-attack and interest rate notifications.
Results from the first half of the 2023 financial year also revealed that the letters business made a loss of $189.7 million, and indicated that letters revenue now makes up just 18.8 per cent of total Australia Post revenue, down from 19.5 per cent in the first half of 2022.
Australia Post Group CEO and managing director Paul Graham said it was facing significant challenges that need to be addressed to ensure the business is able to meet its obligations to customers and communities in a way that is financially sustainable in both the immediate and longer-term.
“We are at a crossroads and the headwinds facing our business have never been stronger. Our letters business continues to decline, as volumes fall and costs increase. Changing customer behaviours are also impacting our retail network, with continuing digitisation resulting in declining retail transactions at post offices. As flagged in our 2022 financial results, Australia Post will report a full year loss this year for the first time since 2015,” Graham said.
“Every year it’s costing Australia Post more to deliver fewer letters. We know letters are in an unstoppable decline, thanks largely to digital communications, yet letter costs are rising due to the increasing number of delivery points we service every day. This all contributes to increased losses and is a global issue facing all postal services. We expect annual volumes will decline further, with Australian households receiving less than one letter per week by the end of the decade.”
PVCA CEO Kellie Northwood confirmed that as an industry, the association works closely with Australia Post and reviews mail volumes consistently.
“There are complexities greater than volumes which need to be examined to understand the data, and future strategy, more accurately. Some channels are reflecting volume stability, and some are recording improved performance to volumes from prior year. That said, some of the larger business mail sectors, such as PreSort, are in decline which is impacting overall volumes,” she said.
“The industry is seeking greater collaboration across the mail products that are delivering strong performances as the grouping of mail into one can reflect poorly on a marketing communications channel that is the most trusted, safest and carrying the highest response rate performance than any other mass/customised blended channel.
“We know consumers are more concerned than ever across their privacy and data security, we know the mail channel carries the lowest identity theft statistics than any other personalised sector and we know younger cohorts view mail as more important than any other,” Northwood added, pointing out all of this reflects the channel relevance is strong.
Northwood went on to highlight the importance of all sectors, including government, to recognise the size of the paper, print and mail industry in this country – employing 258,000 Australians across metropolitan and regional locations.
“Generalist comments consistently misrepresent the important role print media channels play in our society. As a marketing communications channel we are one of the most effective in brand recall, information comprehension and trust,” Northwood said.
“The most recent position from the Prime Minister, thankfully overturned, across Voice Referendum communication to exclude print is a notable example of how our industry is consistently presented by government as a dying industry and it is simply untrue.
“From newspapers to catalogues, charity mail communications to education, magazines to financial statements, print is a valid and effective media channel.
“As a country with an increasing digital divide, a vast geographical footprint, low accessibility rates and poor OECD affordability ranking across internet affordability, we need to work in a united approach with Australia Post, government, trade unions and industry to build a longer-term strategy to secure our postal services across the country.
“Industry cannot operate on a fluctuating 12 monthly pricing review cycle; Australia Post needs to have some of its encumbrances from government reviewed. The trade unions are seeking employment stability and together, we need to build longer-term, commercially viable and socially beneficial solutions to secure a strong and sustainable postal service.
“If that review process delivers reduced regulatory obligations, pricing and employment stability from flexible delivery schedules, improved operational efficiencies, streamlined mail products and more, the industry is open to all discussions.”
An article published by the Australian Financial Review on the subject reports that the issue is gaining the attention of the PVCA, as well as the letters sector, unions and certain politicians.
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