1H23 Results and Our New Operating Model

Today we’ve announced our financial results for the first half of FY23. While there is a lot for us to be proud of in how we’ve delivered for our customers and communities, the results underline the seriousness of the challenges facing our business. We’ve been flagging concerns about the long-term viability of our business for more than a decade, and while a temporary spike in our parcels business during COVID masked these to some extent, the reality of our situation is now evident. To help respond to these challenges, today we’ve also announced a new operating model for our support teams to help us deliver on our Post26 strategy.

For the six months to 31 December 2022, we delivered Group revenue of $4.69 billion, down 2.4 per cent on 1H22, and Group profit before tax of $23.6 million down 88.2 per cent on the previous corresponding half.

Our results were heavily impacted by the ongoing decline of our letters business, which reported a total loss of $189.7 million, an increase of 171.5 per cent on previous corresponding period. Letter volumes are now 66 per cent lower than 2008, while the cost of delivering continues to rise with around 200,000 new delivery points added each year. In short, each year it’s costing us more to deliver fewer letters.

Growth in our parcels business continued to moderate, reflecting a stabilisation in online shopping activity following the height of the pandemic. Parcels and Services revenue fell 1.6 per cent in the first half, which is a solid result in a highly competitive market. Despite the challenges presented by severe weather events and labour shortages, we still delivered a record number of parcels over the Cyber sales and Christmas period. This is something we should all be proud of.

Managing our costs

We have an obligation to manage our costs responsibly – balancing the right level of investment to deliver for our customers and communities, while also being mindful of our cost base. We’re continuing to focus on finding efficiencies in our operations and businesses, with $121.1 million realised in 1H22.
With losses in our letters business gathering pace and the twin pressures of moderating growth and increasing competition in our parcels business, the reality is our cost base is under pressure and we need to act. We’ve taken the first steps with the launch of our Post26 Strategy and the introduction of Our AP Way. The next step has been turning our attention to the structure of our support office, to ensure we’re set up to deliver these big projects and become more customer focused.

A sustainable operating model

Today we’re announcing our simplified and streamlined operating structure for our support teams, which aligns with our Post26 strategy and is effective Monday, 13 February 2023. This new operating model will allow us to better meet the needs of our customers and communities, have clearer accountabilities and, importantly, will help the business respond to the financial pressures we’re facing.

The central change is how we’ll structure the Group – with two Business Units, two Operational Units and three Support Functions.

Our Business Units will be Parcel, Post & eCommerce Services, led by Gary Starr, and Retail, Brand & Marketing, led by Cat Noble. This is a significant shift for how these businesses will operate, and each business unit will have end-to-end accountability for the products and services they offer, as well as profit and loss accountability.

The two Operational Units will be Network Operations, along with Digital, Technology & Data. The Network Operations team will be led by Rod Barnes and, as I announced earlier this week, Leonie Valentine will be departing Australia Post on Friday, which means we are currently recruiting for the Digital, Technology & Data EGM role. In the interim, Munro Farmer, Diane Mardrous and Roshan Khozouei will report directly to me. The Operational Units will play a critical role planning, building and maintaining infrastructure and operations across the enterprise while meeting agreed service, cost and performance targets.  

Our Support Functions will be Finance, led by Rodney Boys, Community Sustainability & Stakeholder Engagement, led by Tanny Mangos, and People & Culture, led by Sue Davies. These teams will set functional standards and frameworks to support the Business and Operational Units.

Next steps

I hope you’ll join me at 10:30am (AEDT) this morning at our Town Hall where I will talk further about our 1H23 Results. Following this, your EGM will share more details about their own structures, including any new reporting lines and responsibilities.

Today’s announcement is the start of a process that will last for several months, during which time we’ll review the structures that sit underneath the changes we’ve announced today. Change is never easy and this has been a difficult decision for the business – however, the structural challenges we’ve been facing for several years are only intensifying and these changes will help us to ensure the long-term sustainability of Australia Post. My commitment to you is to communicate regularly and transparently as we continue to work through the next phases of this process.

Further information

In the meantime, you’ll find more information here – this site will be updated throughout the day with further detail about changes in each area. Your wellbeing is our top priority and I appreciate this process can be unsettling, so please feel free to reach out to your people leader with any questions. You can also contact our confidential Employee Assistance Program (EAP) on 1300 687 327, at any time if you need additional support. 

Thank you

Today is a pivotal day for our business. We’re at a crossroads and the challenge ahead of us is undeniable. As a business we’re on track to report a full-year loss for the first time since 2015. There’s no choice but to change and to modernise. We have a strong plan to do just this in our Post26 strategy.

I want to thank you for your unwavering commitment to our customers and communities. It’s disheartening when the effort you put in doesn’t translate into the results you hoped for. I share that disappointment. But our task is to turn that disappointment into resolve – resolve to build a financially, socially and environmentally sustainable business so that we can continue to deliver for our customers and communities into the future.

I look forward to talking to you more this morning at our Town Hall.

Be safe, be kind.

Paul