Australia Post more than halved its annual net profit in 2009/10, but says its parcel business is benefitting from the high Australian dollar and business direct mail volumes are returning to pre-crisis levels.
The government-owned postal business says the continuing global decline in mail volumes, which fell 4.2 per cent in 2009/10, and rising costs, had hurt its bottom line.
But the company plans to expand its digital offerings, with an online retail store to be launched in 2011, to take advantage of the shift towards digital communications.
Australia Post’s annual net profit was $89.5 million for the 12 months to June 30, down 65.6 per cent from $260.5 million in the prior year. Revenue fell 2.3 per cent to $4.856 million in 2009/10.
“For postal operators around the world, we are all experiencing a huge degree of difficulty, a very tough operating environment,” chief executive Ahmed Fahour told AAP on Friday.
“In that environment, we are pleased to have achieved a $103 million pre-tax profit.”
Mr Fahour said the business had recovered in the second half, following a “really tough operating environment” in 2009. Business had performed strongly in the first three months of the current financial year and the outlook for 2010/11 was promising, Mr Fahour said.
“What we’ve seen in the first three months is a very strong rebound in the business, both our financial and operating performance.”
“The Australian economy is very strong and we are finding corporates and businesses have re-entered the advertising market, with increasing volumes of advertising and direct mail.”
Australia Post was also benefitting from the high Australian dollar, as Aussies increased their online shopping on overseas websites.
“We have been positioning our business to really participate in the parcels market,” Mr Fahour said.
“Our volume of overseas items, packages, letters and parcels, is up 24 per cent over the last three months.” Parcels and logistics was the fastest growing business area in 2009/10, with 16.8 per cent volume growth for the eParcel service.
Mr Fahour said Australia Post now delivered two out of every three packages in Australia.
The company is hoping Australians continue their online shopping trend, pushing the national participation rate from three per cent currently up to eight per cent seen across most of the western world.
“If into the future they turn that habit from international to domestic sites, we will have achieved our important strategic objective to become the primary Australian shipper for the online shopping world.”
The postal corporation spent $150 million on restructuring the business and voluntary redundancy costs in 2009/10. Mr Fahour said he was organising the company to be a parcel business, a communication business and a trusted service provider using retail stores.
“There are sizeable and significant opportunities over the next five years and we are positioning ourselves to take advantage of these,” he said.
“Everything that we can do physically to the best of our ability we want to offer digitally.” “We are looking to have an Australia Post shop online, sometime next year.”
Mr Fahour said he expected in time the digital store would return revenue equivalent to a regular retail store.
The Australia Post iPhone App launched in July had been the number one most downloaded free App in the iTunes business category, he said.
“It’s clear that the services Australians need from us have changed, so whilst we continue to be a trusted provider of mail delivery, letters will no longer be the backbone of the business.”
Australia Post returned $79.1 million to the federal government in 2009/10.