Australia Post is predicting a first full year loss, last seen in 1982, as it warns the government to relax its laws to allow further delivery price increases, or fork out $6bn for a bailout. Australia Post says addressed letter volumes have fallen to 8.2 per cent in the six months, costing the company a loss of $151m, which it says was the worst decline since letter volumes peaked in 2008.
Ahmed Fahour warns of terminal decline
The national carrier’s net profit slumped 57 per cent in the six months to December compared to last year, to $98m, and it says the downward trend will continue to ‘terminally decline’ if allowed to continue. Ahmad Fahour CEO of Australia Post argues the business has a competitive parcel arm but the losses in its letters division is making in the company’s sustainability difficult. Printers and mailing houses question AusPost’s resuscitation strategy, many arguing the company is massively overstaffed, and are against the rising of prices, which they say will drive marketeers to competing channels. However the company is pushing the government to relax its regulations to allow further price increase to its mail delivery services. Australia Post has already increased its bulk mail prices by 7.3 per cent, which was to offset its $328.4m loss last financial year in its letters division. Fahour is warning this may become a burden on the federal budget unless the regulatory environment was changed. “If we do not change, the Government put in a report that forecast what would be the losses over the next ten years, and we are looking at a total letters business loss of $12bn,” he told ABC. “The whole corporation will lose $6bn, which somebody’s got to pay for.” Fahour argues AusPost is still a ‘first class parcel and mail company’ and could run a profitable business granted there were changes to its service obligations. Last year, the national mail carrier recorded a loss of $328.4m at an EBIT and continued on the losing streak through the year pushing the group into an overall $43m second-half loss. Printers and mailhouses have widely condemned the giant mail carrier’s blow to the industry with its 7.3 per cent bulk mail price hikes, and now they are facing another likely price increase, which seems to be the company’s theme for 2015. (link to AusPost raises bulk mail prices} The giant this year has also dumped PostConnect, which saw it set up its business to compete directly with its major transactional printing and mailing clients.
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