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Australia Post Warns of Upcoming Losses

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By Published On: February 27, 20180 Comments

Australia Post’s Group reports that revenues are up by 3 percent to $3.6 billion for the 2018 half year, underpinned by solid e-commerce trading and parcel growth, however it warns of a loss in the second half.

Australia Post Parcel revenues increased by 8 percent in the first half of the 2017-2018 financial year, outperforming its retail sales growth. Despite competitive pressures which impacted its domestic parcels earnings growth modestly, overall growth compensated for the 10 percent fall in addressed letter volumes.

Encouragingly, the Group delivered strong inward growth from Asia, with inbound parcel volumes up 45 percent in the period, with almost all of this growth coming from China. Australia Post says its international e-commerce volumes indicate a future opportunity for the logistics company.

Addressed letter volumes have fallen more than 26 percent in three years as large organisations continue to drive their communications online. Australia Post says that letter revenues were boosted by the Australian Marriage Law Postal Survey.

“Without this survey, letter revenues would have experienced an even sharper decline,” the company wrote in a statement release. The results demonstrate the compelling need and significant challenge for Australia Post to continue to transform.

Australi Post’s new chief executive officer and managing director, Christine Holgate said during the first half, the business made progress in driving further operational efficiencies, achieving a further $113 million in expense savings, which helped costs to grow marginally below revenues.

“Two-thirds of Australia Post revenues are now in competitive markets and although deliveries were strong and cost savings were encouraging, trading EBITDA was flat at just 1 percent growth,” says Holgate.

“Reported profit after tax of $217 million was up 65 percent, or $86 million, boosted by benefits from property transactions and other one-off items. Due to the strong seasonal nature of our business, we expect to again make a loss in the second half.”

“Although we forecast a full year profit before tax result in-line with last year, going forward it is critically important we focus on returning Australia Post to sustainable growth.”

In developing its new strategy Holgate confirmed Australia Post will continue to meet the needs of Australians including by maintaining a healthy and viable Post Office network, including our Licensed Post Office partners.

“We are currently working to find new revenue streams for our Post Offices, as their role in communities becomes increasingly important to serve an ageing population and with traditional services closing branches.”

The business continues to invest in infrastructure and customer experience whilst maintaining a healthy cash balance of $480 million with Standard & Poors reaffirming the strong credit rating of AA- during the last 6 months.

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