Australia Post lifts interim profit to $249.1m as it urges reform to shore up financial future
The postal group chief says it’s ‘inevitable’ that deliveries will be cut to every third day, arguing the ‘reform’ is needed in order to survive competition from foreign providers and the gig economy.
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Australia Post has warned that mail delivery may be further reduced to every third day and postage costs raised to remain financially sustainable as it faces an increasingly competitive parcels sector with a growing number of new entrants.
The government-owned postal network recorded a $249.1m interim profit for the first half of the 2025 financial year – up $215.5m from the prior period – driven by cost controls under its Post26 strategy. However, chief executive Paul Graham warns that rising competition and declining traditional revenue streams mean the company cannot afford complacency with the outlook challenging for the second half.
“In this environment of increasing competitive headwinds and ongoing structural challenges, further reform is required to ensure the long-term relevance and financial sustainability of Australia Post,” he said.
“As our mail volumes fall we need more reform around when we deliver mail, which will inevitably shift to every third day to stem losses and make sure our post network is fit for purpose given today it is all about parcels instead of other over the counter options we do.”
The rise of e-commerce giants like Amazon, along with Chinese operators such as Temu and Shein, is further eroding Australia Post’s position, as these companies capture market share previously held by traditional Australian retailers, its core base.
“At the same time as these Chinese platforms, there have been new entrants into last mile delivery that have little overheads and a low cost base due to the use of gig workers,” Mr Graham said.
“This is chipping away at our parcel business, which makes a significant contribution to the economy in terms of jobs, community and paying taxes. Many of these new entrants don’t have the same commitment that we do.”
The letters segment lost $83.7m in the half, despite a 30c increase to the Basic Postal Rate in April 2024. The company has sought approval for another 20c increase to $1.70 from the Australian Competition and Consumer Commission, but even if granted, the division will remain unprofitable.
Mr Graham said that while priority mail would still be delivered daily, the average household was unlikely to notice any reduction, as it received fewer than two letters per week.
“We face heavier losses if we can’t lift prices. We have a large fixed cost network delivering mail to 12.6 million households a day but that volume is declining,” he said.
“You don’t need to be an economist to see that we can’t make $1 if our revenue is declining by more than 10 per cent a year while the cost of undertaking mail delivery is rising by $200,000 annually.”
Australia Post delivered more than 262 million parcels in the first half, a 3 per cent increase from the previous period, but the letters business remains in free fall, with volumes plunging by 98.2 million, or 10.6 per cent.
The letters segment lost $83.7m in the half, despite a 30c increase to the Basic Postal Rate in April 2024. The company has sought approval for another 20c increase to $1.70 from the Australian Competition and Consumer Commission, but even if granted, the division will remain unprofitable.
Cost-cutting remains central to the turnaround effort, with $87.2m in savings realised under the Post26 Strategy. Australia Post has also fully implemented its modernised point-of-sale system, POST+, which handled record transaction volumes during the peak season.
The parcels business, which generated $3.53bn in revenue — a 6.0 per cent increase — remains the core driver of Australia Post’s performance. The record 2024 peak period saw 102.8 million parcels delivered, with Black Friday sales playing a key role.
Australia Post this month finalised new Bank@Post agreements with existing banking partners, CBA, NAB and Westpac and confirmed ANZ has agreed to join Bank@Post from October 1. It was also holding talks with Macquarie and HSBC about joining the platform.
The service has grown in popularity as the major banks wind back the number of branches operated. Mr Graham said the new agreements would help cut Bank@Post losses and ease the burden on taxpayers, as the previous deals were unsustainable and cost the postal service money on every transaction.
“The new agreements put us on a much stronger financial footing, both in terms of the infrastructure investments we need to make and flow more revenue to our licenced post offices,” he said.
Mr Graham said that the trial of parcel format stores have been received well and more would be rolled out based on local demographics. He said most people now visit the post office for parcels, but areas with more retirees tend to use more over-the-counter services, such as banking, while younger generations, like Gen Z, focus mainly on parcels.
Originally published as Australia Post lifts interim profit to $249.1m as it urges reform to shore up financial future
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