‘Irreversible challenges’ mire Australia Post as service battles back to $88m loss

Trying to make money from delivering letters in 2024 is a tough slog, as Australia Post’s financial results show.

“There are irreversible challenges confronting us, including the decline of letters and the shift from over-the-counter transactions to digital services,” the Australia Post chief executive says. Picture: NewsWire / Andrew Henshaw

Australia Post has revealed an $88m loss for the year, but it has slashed the deficit by nearly two-thirds from the year before.

Revenue from parcels ticked up 2 per cent to $7.42bn, annual results released on Friday show.

But the service handled 250 million fewer letters, down 12.9 per cent to 1.79 billion, and is calling on the banks to kick in more cash.

Chief executive Paul Graham said improved business performance was pleasing, but Australia Post was still staring into structural challenges that were not going away.

Australia Post is struggling to compete against multinational retailers. In August scaffolding fell onto this Australia Post van in Sydney; Two staff inside were not injured. Picture: NewsWire / Damian Shaw

“There are irreversible challenges confronting us, including the decline of letters and the shift from over-the-counter transactions to digital services.

“I’m pleased the things we do have control over, such as simplifying our business, removing complexity and cost, driving efficiencies and careful expense management, have driven the improved financial performance for the year.”

The volume of domestic parcels rose 1.8 per cent, creating a 3.3 per cent jump in revenue to $6.46bn.

“This is a solid result in a highly competitive environment that sees Australia Post competing against large, well-funded foreign multinationals and private equity operators,” Mr Graham said.

Australia Post chief executive Paul Graham says the business faces irreversible challenges. Picture: NewsWire / David Crosling

Australia Post competes against the massive multinational online retailers (and their third party delivery drivers), but is also tied to the Australian Postal Corporation Act 1989 which mandates the cost and speed for delivering letters.

Meeting these obligations cost Australia Post $447m this year, up a little more than 1 per cent, of which the government does not pay a cent.

In response to calls from consumers, the business started next-day parcel delivery in Adelaide, Brisbane, Melbourne, Perth and Sydney, with plans to expand this coming year.

But being able to do banking in person at a post office is not making the operation much money.

Australia Post handled 250 million fewer letters this year, down 12.9 per cent to 1.79 billion. Picture: NewsWire / Andrew Henshaw

“The shifting banking landscape, along with the increased cost of doing business, means Bank@Post is heading towards losses over the medium term unless our bank partners provide additional funding,” Mr Graham said.

“As Australia Post serves more banking customers, we must reconsider our increased compliance, safety and security measures for customers and our team members.”

Fewer businesses and people are sending letters, and fewer people are going into the post office, amplifying the “two-speed nature” of the company’s business.

“The changes we’ve made to the business are a significant step in the right direction … However, there is more work to do and further reform is required to ensure Australia Post is sustainable and delivers for communities for another 200 years,” the chief executive said.

Australia Post is a self-funded government business enterprise, with the Australian Government as its sole shareholder.