Australia Post has reported US$8.97bn (US$6.2bn) in annual revenue for the financial year June 01, 2021, to June 30, 2022 – representing an increase of 8.5% from the previous year.
Despite growing letter losses, strong parcels revenue in the first half drove this revenue growth, while in the second half, e-commerce returned to normal growth rates. The full-year group profit before tax was A$55.3m (US$38.5m). This includes letters losses of A$255.7m (US$302.29m), supported by sales of surplus assets and re-evaluations, as well as advantageous bond rate movements, according to the company. After the first-half profit, the second half of the financial year incurred a loss of A$144.5m (US$100.7m), which is higher than in previous years.
Approximately A$1bn (US$697m) has been invested by Australia Post over three years to improve its customer service, with A$427m (US$297m) invested in new parcel facilities, fleet and technology in 2022. Australia Post invested an additional A$17.1m (US$11.9m) into the Licensed Post Office network, bringing the total paid to licensees in 2022 to A$536.6m (US$374.19m), supporting post offices in Australia. In 2022, Australia Post paid a total of A$661m (US$461m) in taxes and other government charges. During FY22, Australia Post returned dividends to the Australian Government totaling A$36.3m.
The company expects the significant growth in e-commerce experienced in early 2022 will continue to moderate, while an ongoing structural decline will accelerate letter losses. Australia Post will continue to drive productivity gains to reduce costs, and invest for the long term, however, it is expected there will be group losses in the financial year of 2023.
Following first-half parcels revenue driven by lockdowns in New South Wales (NSW) and Victoria, parcels growth moderated in the second half. Parcels and services revenue for the full year was up A$711.5m (US$841.8m), or 11.0%, to A$7.2bn (US$5m). While the company continued to deliver for customers and the community, there were significant cost increases, specifically related to Covid-19 restrictions and labor shortages that impacted the ability to turn this increased revenue into profit.
Underlying letter volumes, excluding those related to the census and federal election, were down 4.0% on the previous year. With falling letter volumes and an ever-increasing number of delivery points to service, losses in this business are expected to continue, and at an accelerated rate. The typical household in Australia today receives only one letter every two days, with 97% of letters sent by businesses or government agencies. The increasing adoption of digital communications will continue to reduce volumes.
A draft notification was provided to the Australian Competition and Consumer Commission (ACCC) proposing to increase the basic postage rate (BPR) from A$1.10 (US$0.77) to A$1.20 (US$0.84), effective from January 2023. The proposed increase would be the first since January 2020 and will help Australia Post continue to provide mail services to every Australian. This proposed change will not affect the A$0.60 (US$0.42) concession rate or the A$0.65 (US$0.45) Christmas and seasonal greetings rate.
During the year, enterprise agreements were secured for more than 30,000 team members. In addition, Australia Post will pass on the higher of 3% or Consumer Price Index (CPI) for the first two years of those agreements, announcing a 6.1% increase in July this year, in line with CPI. The company has highlighted that the wage increase places pressure on its cost base and underscores the need for discipline in all costs as well as productivity improvements. Australia Post also reported that it continued to address rising costs by realizing A$207.3m (US$144.6m) in business and operational efficiencies. The group’s expenses increased 9.2%, driven by additional costs associated with the Covid-19 pandemic, as well as limited domestic and global air transport capacity, which resulted in higher costs for airfreight services.
Paul Graham, chief executive officer and managing director of Australia Post, said, “Despite the growing headwinds, this was a solid result. I am immensely proud of how our people have met the challenges of a global pandemic and still delivered essential services to all Australians. Not only did our team work tirelessly to keep themselves and their communities safe, but this was achieved in an environment of evolving restrictions. I’m pleased we were able to deliver a record number of parcels and expand our range of services, connecting all Australians during this difficult time. While it’s clear more Australians are buying goods online following the pandemic, we don’t expect to see the same level of e-commerce growth. This has been demonstrated in our second-half results and, going forward, we anticipate growth to be moderate. Despite the significant financial headwinds, we are focusing on business efficiencies, while continuing to invest in our network and technology, to better meet the needs of our customers.”