Despite posting a pre-tax loss of A$88.5m (US$60.3m) in its 2024 financial results, Australia Post says its Post26 strategy is beginning to pay off as it has reduced its losses from A$200.3m (US$136.5m) the previous year.
The modernization strategy is helping to improve revenues, with group revenue up 1.8% year-on-year (YoY) to A$9.13bn (US$6.22bn), and parcels and services revenue up 2.3% on last year to A$7.42bn. However, letter volumes fell 12.9% YoY to 1.76 billion and revenues were down 5.8% to A$361.8m (US$246.6m).
Australia Post says it is delivering on its strategy of disciplined cost management and ongoing simplification of the business. Productivity improvements under Post26 drove business efficiencies of A$268.9m (US$183.2m) in FY24, up from A$236.7m (US161.3m) in the previous year. Despite significant inflationary and other economic pressures, this cost reduction was achieved while still investing A$306.1m (US$208.6m) in new facilities, technology and fleet.
Hopeful outlook
The first phase of modernization reforms took effect in April 2024 and Australia Post expects to see improved financial sustainability in the medium term. This year, the estimated cost to deliver Australia Post’s regulated community service obligations increased to A$447m (US$304.6m) – up from $442.2m (US$301.4m) in FY23 – and is entirely self-funded.
According to group chief executive officer and managing director Paul Graham, although it’s pleasing to see improved business performance, Australia Post still faces structural challenges that are not going away.
“Our Post26 strategy and the historic phase one modernization reforms have put the business on the right track, and we’re now starting to see green shoots as we turn around the business,” he explained.
“There are irreversible challenges confronting us, including the decline of letters and the shift from over-the-counter transactions to digital services. I’m pleased the things we do have control over, such as simplifying our business, removing complexity and cost, driving efficiencies and careful expense management, have driven the improved financial performance for the year.
“We are focused on our customers and providing them with more flexible and reliable parcel deliveries, new and innovative services across our enterprise, greater online accessibility through our market-leading app and a better customer experience online and in our retail outlets.”
More work to do
Graham continued, “I’d like to thank our extended workforce of more than 64,000 team members, who deliver for our customers and communities across every corner of Australia, every single day.
“The first phase of modernization, including the change to our letters business, is progressing well. We continue to work closely with our union partners to implement this across our network. We are also focused on transforming our post office retail network alongside our valued licensees, as we work to ensure appropriate compensation for the services they provide, particularly Bank@Post.
“The shifting banking landscape, along with the increased cost of doing business, means Bank@Post is heading toward losses over the medium term unless our bank partners provide additional funding. As Australia Post serves more banking customers, we must reconsider our increased compliance, safety and security measures for customers and our team members.
“The changes we’ve made to the business are a significant step in the right direction for our customers, our team members and the broader community. However, there is more work to do and further reform is required to ensure Australia Post is sustainable and delivers for communities for another 200 years,” Graham concluded.