Online retail boosts Aust Post profit

Australia Post has increased annual pre-tax profit by 31 per cent, thanks to continued growth in online shopping.

But traditional mail volumes have declined for the fourth year in a row.

The government-owned corporation recorded a pre-tax profit of $332.3 million, up 31 per cent from $253 million in fiscal 2010.

Revenue rose 2.8 per cent to $5.01 billion, up from $4.87 billion.

It is the first time in four years that Australia Post's revenuegrowth has outstripped cost growth.

Australia Post chief executive Ahmed Fahour said online shopping would drive the business into the future as 70 per cent of the $1.36 billion in parcels revenue was generated by e-commerce.

"It is the powerhouse of our business," Fahour said.

He said parcel portfolio volume growth of 10.9 per cent drove parcels revenue up 5.3 per cent and resulted in a 36 per cent growth in profit over the past 12 months.

"This is only going to continue as online retailing in Australia continues to grow at a rapid rate," he said.

Fahour said Australia Post had shifted its focus towards online shopping since April last year.

But it was now a "two-speed business" which recorded losses in its mail business and competed in the parcels and retail businesses.

"We lose a lot of money in the traditional mail business but we have a really fast-growing and competitive business in parcels, e-commerce and retail," he said.

Letter volumes continued to decline, with 89 million fewer articles passing through the network.

Research conducted for PricewaterhouseCoopers predicts Australian online spending will grow by 12.5 per cent per year over the next five years.

It says the trend towards buying from overseas websites is expected to increase to 50 per cent of online purchases by 2015.

Fahour says that while 70 per cent of parcels ordered online were currently mailed domestically, that figure was likely to move to 60 per cent as more Australians shopped on overseas websites.

"We think the amount of online spending will approximately double in the next five years," Fahour said.

He says parcel revenue could increase to more than $2.5 billion by 2015.

"We're not going into forecasts, but what we are saying is one part of our two-speed business has an enormous upside.

"There are an enormous set of competitive opportunities out there."

The result comes amid a global decline in mail as consumers correspond online and by text messages.

Australia Post continues to record losses on its international parcel business due to international pricing constraints but is trying to negotiate higher prices for international parcels.

On Monday, Australia Post announced it had extended the operating hours of parcel pick-up points and would trial 24-seven accessible parcel lockers.

Customers would receive email and SMS notifications when their parcel arrived.

The organisation says it will focus on providing lockers capable of handling packages weighing up to 32 kilograms, covering 90 per cent of purchases online.

Larger items such as fridges and televisions could still be delivered using the Messenger Post service.

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