No-one is writing letters anymore. Or at least, if they are, they’re not posting them.
Australia Post’s profit is down 56% to $98 million for the first half as losses from the letter service grow.
The post is heading for its first full-year loss in more than 30 years.
The fall in profit was driven by growing losses of $151 million in the letters business which is 57% worse.
Letter volume decline accelerated to 8.2%, the largest fall since Australia Post’s letter volumes started slipping in 2008.
Australia Post’s current forecast for the full year is for a company-wide loss, its first since 1982.
The parcel services revenue was up 4% but losses in the letters business are forecast to overwhelm the parcels business’ profit in the seasonally quieter second half of the financial year.
CEO Ahmed Fahour says the result highlights the urgent need for regulatory reform of Australia Post’s letters service to ensure a stabilised mail service.
“The immediate challenge for our business is clear,” he says. “We have been carefully managing the real decline in our letter volumes for the past seven years. But we have now reached a tipping point where we can no longer manage that decline, while also maintaining our nationwide networks, service reliability and profitability.”
A government-commissioned external report last year predicted that without reform Australia Post will incur $12.1 billion cumulative losses in letters and $6.6 billion for the enterprise over the next 10 years.
Australia Post is seeking government approval to change its regulations to enable it to introduce a new Regular letters service for non-urgent consumer mail delivered two days slower than the current schedule.
Those wanting to use the existing timetable would pay more for a priority service.