Australia Post faces first full-year loss

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AUSTRALIA Post chief Ahmed Fahour says the postal service is careering towards its first full-year loss in more than 30 years as the letter dies out.

Mr Fahour has revealed the group’s net profit slumped 56 per cent in the six months to December, compared with a year earlier, to $98 million.

And it will fall deep into the red this half, handing the authority its first loss for any financial year since 1982, he says.

Speaking as Australia Post published its first-half results yesterday, Mr Fahour said while letter volumes were dwindling, the group’s parcel business was well placed to ward off extra competition.

Japan Post last week struck a $6.5 billion deal to buy Melbourne-based logistics heavyweight Toll, giving the Japanese group a significant role in the Australian market.

Mr Fahour said other offshore players such as Deutsche Post were also increasingly competitive. But Australia Post had been an early mover with internet retailing locally, he said, increasing parcel revenue from $1.3 billion to $3.6 billion in the past five years.

“We’ve tripled the size of that business — we identified online shopping and e-commerce as a trend early on.”

“(Now) we’ve got this great business within Australia Post with no subsidies, which is a world class business.”

Japan Post is to be privatised later this year and Britain’s Royal Mail was floated in 2013, with some industry experts saying that Australia Post should also be sold off.

Mr Fahour said that in the short term, he was confident the Federal Government would deliver reforms necessary to bolster the authority’s financial health.

“I think it is only a matter of time,” he told BusinessDaily. “I’ve said we need answers this financial year. Nothing leads me to believe they are not listening.

“You can’t just keep going on about the situation in perpetuity. That is why we put a time limit on it.”

Mr Fahour has been pushing for more flexibility around stamp prices to reflect costs and has asked for permission to introduce a “two-speed” mail service. “If we don’t get regulatory reform, either we get a $6 billion subsidy or we’re bust,” he said.

The first-half loss came on the back of an 8.2 per cent slump in “addressed letter” volumes. This inflicted a $151 million loss on the letters division — 57 per cent worse than the same period last year.

“We have been carefully managing the real decline in our letter volumes for the past seven years,” Mr Fahour said.

“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.”