Australia Post Releases 2022 Annual Report
Australia Post has released its 2022 Annual Report which further underlines the structural challenges facing the business as letter volumes decline and more customers choose to access over-the-counter services online.
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The Annual Report details the rapid growth of eCommerce over the past two years, which was turbo-charged by the COVID-19 pandemic. The strength of the parcels-delivery business driven by the online boom has masked increasing Letters losses, which totaled $255.7 million in FY22, up from $205.7 million in FY21.
“The success of our parcels service has been a great story for Australia Post and the community, but it has obscured the significant structural challenges in our letters service which are deepening and beginning to significantly impact our financial performance,” Australia Post’s Group Chief Executive Officer and Managing Director Paul Graham said.
“Over the past three years, parcels delivery revenue has increased by 65 percent, while letters revenue has fallen by more than 17 percent. While we remain committed to meeting the needs of the community, the ongoing and rapid decline in the letters business is not sustainable. As we flagged in our full-year results, it’s clear that losses in this business are expected to continue into the future, and at an accelerating rate.”
Australia Post Battling Lower Letter Volumes But More Delivery Points
The 2022 Annual Report notes that even with 133 million letters delivered and sent for the Census and multiple elections including the May 2022 federal poll, letter losses continued to increase as delivery points grow.
“Australia Post’s addressed letter volumes have declined by 66 percent since volumes peaked in 2008. In the 2008 financial year there were an average of 8.5 addressed letters per delivery point per week, compared with an average of 2.4 addressed letters per delivery point per week in FY2022,” Mr. Graham said.
“Over the past five years, letter volume has declined by an average of 9.5 percent per year. But as letter volumes continue to decrease, the number of delivery points that we need to reach is growing, with about 200,000 more added this year. This is a worldwide trend, with global letter volumes down 30 percent since their peak in 2008.”
“Essentially, the revenue from our letters service is going down because people are sending fewer letters. At the same time, the cost of delivering our letters service is increasing and the number of delivery points is growing.”
Added to the steep reduction in letter volumes, the number of customers accessing Post Offices is also in decline.
“The accelerating customer preference for online services is decreasing the demand for over-the-counter and in-person services, including renewals of post office boxes, agency banking, bill payments and spending instore,” Mr. Graham said.
“Despite the headwinds, we are continuing to invest in our digital technology, network capability, and parcels business, which operates in a highly competitive environment. This will help to meet the needs and expectations of customers and communities, as digitization continues to fundamentally change the consumer landscape.”
“We also continue to invest in our teams introducing a new Our AP Way cultural program and prioritizing our team’s physical and mental well-being. Our people were magnificent during Covid-19 and have continued that 213-year passion for service and commitment.”
Australia Post will start positioning the business for success as the economy and consumer preferences continue to evolve, with a renewed focus on supporting team members and licensees, delighting customers and communities, and building a more sustainable future under the ‘Post26’ plan.
“While these challenges are not new, we are determined to ensure Australia Post is financially, socially, and environmentally sustainable to enable the business to continue making a positive contribution to Australian communities, now and in the future,” Mr. Graham said.
“Australia Post is proud to serve the Australian community and can only do so through the dedication of our 65,000 team members, but also thanks to the incredible support of our loyal customers. We look forward to growing with you to help deliver a better tomorrow.”
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Editorial Note: This post is from a Company Press Release and may have been modified for clarity.