AusPost CEO issues warning on letters

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National mail monopoly Australia Post group revenue for first half of 2020 was up four per cent year-on-year, but letters revenue plunged again, down by nine per cent, with CEO Christine Holgate warning “the time has come to transform these services".

Best paid civil servant: Christine Holgate, Australia Post 
Time has come: Christine Holgate, CEO, Australia Post

Losses from letters increased by 112 per cent to $87m on revenue that fell to $1.1bn. Parcels and Services meanwhile saw its revenue shoot up by 13 per cent to $2.7bn, with profits rising 12 per cent to $193m. Group profit before tax stood at $83m, down $71m or 46 per cent for the six months.

Although Australia Post secured $129m in efficiencies in the period and has benefited from strong growth in other areas, this still has not fully compensated for the increasing costs in letters supporting what it is now calling ‘this important community service’.

Group CEO and managing director Christine Holgate said: “Our strategy to diversify our business and focus on our customers is working well, evidenced by our record underlying performance.

“However, the costs to operate the letter business continue to rise, as our people are still required to deliver to every home or business every day, process and collect the mail, whilst letter volumes and revenues fall. The 10 cent letter increase in January will support our letters business going forward, but after four years of no increases, it alone will not fully compensate for the losses.

“Australia Post and the services we provide are highly regarded in the community, particularly in rural and regional Australia, where often we are the last remaining service provider with a physical presence. In order to ensure we are able to continue to provide these community services and remain sustainable, the time has come we must transform our delivery network."

Paper, print, mail, publishing and distribution body The Real Media Collective is voicing concern with Australia Post’s half-yearly results and commentary, arguing Australia Post’s mailing strategy needs review.

“The Collective recognises digitalisation across many channels is occurring and mail is feeling the impact of this evolution. However, Australia Post’s response to this is price increase after price increase, shown in these half-yearly results, is simply is not the answer. Whilst the Basic Postal Rate or stamp price has recently increased by 10c, Business Mail – the bulk of letters sent everyday – has realised increases of 28-56 per cent over four years across a range of products. This has not steadied the tide, rather price increases accelerate volumes declines,” commented Kellie Northwood, CEO, The Real Media Collective.

“Whilst we continue to hold open dialogue with Australia Post, it would be fair to say our members are frustrated that consultation with industry is not where it should be. Industry have long argued that price increases are not the answer, there are many other solutions we should be implementing in partnership with Australia Post to ensure a sustainable mail sector continues. We have worked with international postal services in Canada, the United Kingdom and Germany which have very different strategic mail partnerships with industry than Australia Post does. We are calling on Australia Post to work harder with industry to develop solutions for the betterment of the sector and ensure Australians can continue to receive mail daily, to all locations – remote and urban for many years to come,” concluded Northwood.

Spruiking the uopsaide of the business Holgate said, "This Christmas was our busiest ever and we delivered 50m parcels in December, with 3.1m on our biggest day, 190m letters were delivered, 4600 staff hired across the national network, and pleasingly during this time complaints to our customer service teams decreased by 14 per cent,” Holgate said.

“Ahead of Christmas we also opened the largest parcel processing facility in the Southern Hemisphere, in Brisbane, and invested in new automation capabilities across a number of our large processing facilities to continue to service our customers.

“During this period of exceptional growth, our entire workforce worked through unprecedented weather conditions across the country with drought and an early start to our bushfire season in November, and we still met all of our service obligations for letters and parcels. The mail continued to make it through to our customers. I am proud of the critical role our people played in these local communities assisting those in their time of need.

“Although we were lucky to not lose any facilities or Post Offices during the bushfire crisis, many of our employees lost homes and property and faced stress as they were evacuated for their safety. Our Post Offices and posties were able to play an essential role supporting impacted communities including with access to critical funds through our Bank@Post services, providing free mail redirection, mail hold services and accepting over the counter donations for Red Cross Disaster Relief Fund, which has raised $1.4m to date.”

Last year the first half result included a one-off $37m benefit from the Aramex and AGS transactions in the period. Consistent with previous years, Australia Post expects the second half to again be quieter.

At this stage the business remains on track to deliver a marginal profit at the full year and is cognisant of the market pressures facing core customers. Australia Post will release its full year results in August.

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Letters plunging: Australia Post
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