Australia Post Reports Tender

Australia Post announced a profit before tax for the first half of 154 million down 36 per cent year-on-year. This included 30 million of one offs. Underlying profit before tax was 124 million down 38 per cent. Group revenue was flat at 3.6 billion.The largest business segment domestic parcels performed strongly with revenue growing by 10 per cent up 147 million well ahead of the general retail market which grew 2.9 per cent in the period. Group parcels profit grew by 25 million to 127 million. In December Australia Post delivered a record 40 million parcels up 12 per cent.All Community Service Obligations were met or exceeded and customer service standards remained high for letters and parcels including through extreme weather conditions across the country during the Christmas peak.Group Chief Executive Officer and Managing Director Christine Holgate said she was pleased with the continued strong performance of the parcels business however significant challenges remain for Australia Post with letters revenue now declining at the fastest rate in its history.Although we delivered 10 per cent growth in domestic parcels well in excess of the growth rates of the economy and in a period of very strong competition this could not make up for the profit decline in the letters business Ms Holgate said.Letter revenues are down 10 per cent or 125 million which reduced profit by 102 million in the half. This is after saving an estimated 50 million in delivery costs as posties carried 40 per cent of our parcels.Since the last increase in the Basic Postage Rate in January 2016 more than three years ago our costs to deliver letters are up 10 per cent. The number of new delivery addresses has increased by 500000 yet letter volumes have declined by 800 million.Australia Post will deliver more than two billion letters to almost 12 million homes and businesses this year. Although it is shrinking letters is still viewed as a critical service by the overwhelming majority of Australians.Australia Post is an entirely self-funding business. Last financial year Australia Post incurred an estimated cost of 404 million in delivering the letters service in accordance with its legislated community service obligations.Group expenses were held at two per cent growth in the first half underpinned by total productivity savings of 121 million. Independent research shows that Australia Post has improved its Total Factor Productivity at twice the rate of the overall economy and reserved letters at three times the rate.