Australia Post suffered a historic blow to its letter business. It dipped $384.1 million into the red.
The enterprise delivered its full-year financial results for 2023. The $200 million loss before tax is the second since it became a self-funded government business enterprise around 34 years ago.
Australia Post believes further losses are expected unless it can secure the “necessary support required to modernize its business.”
Performance for FY2023
The Parcels and Services revenue has shown some improvement at least. It’s up 0.9% to $7.3 billion compared to last year. However, the losses were made due to a massive drop in letter volumes. Letter volumes dropped by 7.8% compared to the previous year.
Its estimated cost of Community Service Obligations is $442.2 million. That’s an increase of 26.9% compared to FY22.
The enterprise believes the business continues to achieve “steady growth,” with revenue up nearly 1%. “However, Letters losses increased over 50% to $384 million in FY23. This financial year also saw a marked increase in the estimated cost to deliver Australia Post’s Community Service Obligations to $442 million, up 27% from FY22,” it said in a statement.
Tough financial journey ahead
It strongly focuses on the quality of revenue within its parcel business. “[We have] conducted a review of products and their associated pricing to align with the market and better optimize the network.
The recent price hike of 10% has not been received well by its customers. At a time when the economic pressure is high, companies, too, are feeling the pressure.
Group CEO Paul Graham said: “If we do everything in our power to run this business well and we get a favorable regulatory response towards modernization, I’m confident that Australia Post will return to profit. Without this support, the FY23 loss will be followed by many more. Inaction could result in a greatly devalued Australian asset.”
Australia Post arms itself with a Post26 Strategy
In FY23, Australia Post focused on simplifying its business. It wanted to be “future-ready” and removed some non-core companies.
The strategy called Post26 includes several deliverables the company has committed to. Reimagine the post office network, create market-leading digital experiences, and build a sustainable letter service. Surprisingly, this is precisely where the company has seen a rapid decline this financial year.
But Graham remains optimistic about the future: “We now have a distinct two-speed business, with our letters business weighing heavily on our e-commerce-driven parcels business, retail and other services.”
A year into the Post26 strategy, Graham believes the results are already showing. “Every day, our team of almost 65,000 people are focused on the task at hand, and I would like to thank them for their efforts.”
About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand.
