Australia Post is in a bad way, as it posts a 45 per cent fall in profits, declaring it’s “making a loss on every stamped letter”.
After a strong first-half profit, a horror second half saw Australia Post lose $144.5 million, for a total profit of $55.3 million. The second-half loss was “considerably higher than in previous years”, according to the company.
This is despite bringing in record revenue of $8.9 billion, an 8.5 per cent leap that shows demand for AusPost isn’t waning.
The first half of FY22 saw record first-half parcels revenue, buoyed by NSW and Victoria lockdowns.
Parcels and Services revenue for the full year was up 11 per cent to $7.2 billion, “achieved in a highly competitive market, with low barriers to entry and new entrants seeking to take market share”, according to the group.
“While we continued to deliver for customers and the community, there were significant cost increases, specifically related to Covid-19 restrictions and labour shortages that impacted the ability to turn this increased revenue into profit.”
Letters business was the real struggle, falling 0.6 per cent to 1.8 billion, figures that would have been a 4 per cent drop if not for the Census and federal election business.
Losses in letters increased by 24 per cent to $255.7 million, forcing Australia Post to announce a price increase of 10-30c on postage rates.
Operational costs also increased by 9.2 per cent, with the group waring these elevated costs will continue into FY23.
“Despite the growing headwinds, this was a solid result,” declares CEO and MD Paul Graham.
“While it’s clear more Australians are buying goods online following the pandemic, we don’t expect to see the same level of e-commerce growth. This has been demonstrated in our second-half results and, going forward, we anticipate growth to be moderate,” he said.
“Despite the significant financial headwinds, we are focusing on business efficiencies, while continuing to invest in our network and technology, to better meet the needs of our customers.”
Australia Post is expecting a rocky FY23.
Enterprise bargain agreements saw 30,000 staffers receive 6.1 per cent wage increases as of July.
“While we are pleased to provide the wage increase for our team members, this places further pressure on our cost base and underscores the need for discipline in all costs as well as productivity improvements,” AusPost warns, saying “ongoing structural decline will see letter losses accelerate”.
“Australia Post will continue to drive productivity gains to reduce costs, and invest for the long term, however it is expected there will be group losses in the 2023 financial year.”