AusPost hikes profit despite fall in letters

Australia Post has recorded a solid boost in first-half profit despite a further 11 per cent fall in letters volumes.

In the six months to 31 December, net profit was $131 million, compared to $16 million in the prior corresponding period.

Managing director and CEO Ahmed Fahour said the result demonstrated the strategy of transforming the national carrier from a traditional postal service to a parcel and ecommerce-centric business had returned Australia Post to sustainability.

"This is one of the strongest first half results in recent history and it demonstrates that we are on the right path to ensuring the future of Australia Post for our people, the community and our important stakeholders," said Fahour.

The half-year result showed solid growth in the parcels business, with domestic parcel volumes up 5.7 per cent and parcel profit up 16 per cent to $189 million. Group revenue increased by eight per cent year-on-year to $3.52 billion for the half.

Letter volumes declined a further 11 per cent in the first six months, with cumulative losses in the letters business 'stabilising,' according to a statement from Australia Post.

Fahour said modelling showed that if the company had not changed, particularly the letters business, it would have accumulated losses of $2 billion and needed a bailout.

"Through the important postal reform program, we have avoided the need for a multi-billion dollar rescue package. It has also meant we have kept our people in meaningful employment while returning a dividend to the Federal Government.

"Today over 70 per cent of our revenue and 100 per cent of our profit is derived from commercial activities in parcels and ecommerce.

"We are delivering more parcels than ever before, with domestic parcel volumes up 5 per cent in the first half, market share increasing and at the same time we're trialling new delivery innovations like evening and weekend deliveries to give our customers an even better experience."

Fahour said Australia Post had introduced a number of innovations including new parcel sorting machines and automated letter sorting machines. "Last year we also made a strategic investment in global parcels/ecommerce giant Aramex and we are already reaping rewards in growing our inbound and outbound parcel volumes.

"It's important we continue to focus closely on making sure our business is running as efficiently as possible, especially as we head into what is traditionally a much more challenging second half."

Australia Post will release its full year results in September 2017.