Australia Post headed for financial loss for first time in eight years

Australia’s postal service is hurtling towards its first financial loss in eight years. And there is one thing to blame.

Australia’s postal service is hurtling towards a year of startling losses as it warns that delivering letters is not sustainable.

On Wednesday, Australia Post warned in a half-yearly revenue update that the specific act of sending letters was wreaking an “unstoppable decline” on the business.

AusPost Group’s revenue dropped down to $4.69 billion for the six months up to December 31, 2022.

While that sounds like a lot, that number actually saw a 2.4 per cent downturn compared to the previous like period.

And despite the staggering revenue, most of it went into operating costs, with Australia Post recording a $23.6 million profit before tax.

That’s down 88 per cent from the year before, when the company raked in $199.8 million in profit.

Australia Post hasn’t recorded a full financial year loss since 2015, but could post one this financial year.

Australia Post has enjoyed eight years of profits but now losses are adding up. Picture Mark Brake

Letters were to blame, according to Australia Post’s CEO Paul Graham.

Losses relating to the operation of sending out letters were higher any other section of Australia Post’s business costs.

The government-owned organisation revealed it lost an eye-watering $189.7 million from Australians sending letters in the first half of the 2022 financial year.

In the same period the year before, letters haemorrhaged $69.9 million – which means the losses have more than doubled over the past 12 months.

The revenue from the letters department was down 5.7 per cent to $881.9 million.

In response, the company has already upped the cost of sending a letter last month from $1.10 to $1.20, which is expected to reduce the losses.

“Our letters business continues to decline, as volumes fall and costs increase,” Mr Graham said.

He warned a full-year loss was a strong possibility, adding that “the headwinds facing our business have never been stronger”.

The national postal service blames most of its struggles on letters. Picture: NCA NewsWire / Andrew Henshaw

The looming full-year loss comes as pandemic-related restrictions have ended, which saw more Australians shop at brick-and-mortar stores than online.

On top of that, inflation has hit the population hard and has started to see shoppers curb their spending, which would also impact.

“Changing customer behaviours are also impacting our retail network, with continuing digitisation resulting in declining retail transactions at Post Offices,” Mr Graham added.

For instance, parcel deliveries dipped in revenue, down 1.6 per cent to $3.8 billion, as e-commerce became less popular among Australian consumers.

Originally published as Australia Post headed for financial loss for first time in eight years