Australia Post delivers after pandemic fuels parcel boom

Parcels pushed revenue up, but letter revenue was down 11pc, despite the 10c a letter postal rate increase in January 2020.

Letter revenue was down 11 per cent, despite the 10c a letter postal rate increase in January 2020. Picture: NCA NewsWire

Australia Post delivered a cracking first-half result, with revenue growth of 15.5 per cent year on year to $4.3bn powered by a parcel business gone berserk.

The strong and continued growth in the last six months of 2020 sealed the half with a profit before tax of $166.6m despite steep losses in its letters business.

But the national postal service flagged parcel business volume to drop as Australia enters a more relaxed 2021, which could affect the full-year result.

Parcels and packages accounted for $3.4bn in Australia Post revenue for the half, up 25.9 per cent for the year.

The $701m jump was due to the unprecedented boom in online shopping wrought by COVID-19 restrictions.

The postal service invested $189.4m in capital works, expanding parcel capacity in the network – including opening a new sorting facility in Sunshine West in Melbourne before Christmas.

Australia Post also called out strong results from StarTrak and Australia Post Global eCommerce Solutions thanks to an increase in volume and a growth in third-party logistics and cross-border eCommerce.

However, it declined to release numbers around the services, only noting that they would be revealed in the full-year results.

Letter volumes dragged down Australia Post’s balance sheet, with volumes once again declining leaving revenue at $900m.

Letter revenue was down 11 per cent, despite the 10c a letter postal rate increase in January 2020.

The letter business hit hard, resulting in a $74.2m loss in the national postal service’s bottom line.

The end of every second day letter delivery in June threatens to further magnify letter losses, something Australia Post acting chief executive Rodney Boys said the business was now preparing for.

Mr Boys took charge following the resignation of former chief Christine Holgate following a political backlash after it emerged that she gifted expensive Cartier watches to senior staff.

Mr Boys said the postal service was “doing all that modelling at the moment,” noting a “very likely possibility” for cost blowouts if every day delivery was reintroduced without any commensurate increase in the cost of letter delivery.

“We continue to do what we can to withstand the structural decline of letters but that’s an unstoppable force and has been accelerated through COVID,” he said.

Letter volumes have been declining for years, with many Australians seldom sending letters.

Mr Boys said he last sent a letter on Monday.

“I sent about half a dozen thank you notes to my team,” he said.

“I find these days people receiving a letter is something that’s quite novel and they get a real kick out of it rather than a text or an email.”

AusPost’s full-year results are out in September and it expects to post “a modest profit” in the face of ongoing uncertainty of COVID-19 and pressures facing customers.