2009-10 Annual Report - Australia Post

OUR BUSINESS
CHAIRMAN’S
REPORT
David A Mortimer AO Chairman
One of the hallmarks of a successful corporation is its ability to adapt to
changing environments and to make that transition smoothly. More than
at any time in our history, this is what Australia Post is facing today.
An immediate priority for our business is to address the electronic
substitution of our traditional letters business. This was the second
consecutive year of steep declines for our domestic letters service:
volumes fell 4.2 per cent in 2009–10, following a 4.1 per cent decline
last fi nancial year. Reduced letter volumes, as well as costs associated
with the business restructure, were the primary factors contributing
to a second successive year of falling profi tability. This year’s pre-tax
profi t of $103.0 million was 73 per cent down on 2008–09.
Declines in the profi tability of our letters business this year were partially
offset by improved performances in other business areas – including
parcels & logistics, which experienced overall portfolio revenue growth
of 1.0 per cent.
By focusing on growth areas, such as parcels and the provision of
trust-based services, we expect to reduce our traditional reliance on
letters as the engine of profi t growth for our business. We are also
investing heavily in technology that will improve both our productivity
and the customer experience, especially in parcel tracking and at the
point of sale in our outlets.
Productivity growth was fl at in 2009–10. This was a strong outcome given
that volume growth was negative across most products and services. To
offset the 3.3 per cent fall in volume, resource reductions were achieved
at the same rate across a range of labour, licensee and contractor services.
Adapting to our rapidly changing business environment does not mean
pursuing profi t at the expense of high service standards. Rather, we are
conscious of transforming this business in a way that always respects
the contribution made by our people, considers our community and
environmental impacts, and protects the enormous brand equity that
we have developed throughout 201 years of serving the nation.
By holding true to our dual objective of earning a profi t and meeting our
community service obligations, we are working to secure a sustainable
and prosperous future for Australia Post.
Changing of the guard
No one has been more dedicated to achieving this dual objective than
our recently retired managing director, Graeme John. Taking on his
governing role three years after joining Australia Post in 1990, Graeme
was the guiding force in transforming a government-style bureaucracy into
an enterprising, effi cient and profi table business. Graeme’s legacy will
be long felt by Australia Post, and we all wish him well in his retirement.
This year, the baton of upholding our dual objective was passed to our
new managing director and chief executive offi cer, Ahmed Fahour, who
brings with him extensive local and international experience as a leader
in businesses such as Citigroup and NAB. Since his appointment in
February 2010, Ahmed has embraced the challenge of shaping our
business for the future while improving profi tability and maintaining
our community focus and values.
8 AUSTRALIA POST ANNUAL REPORT 2009–10 | REPORT OF OPERATIONS
Future Ready
In April, the Australia Post board endorsed the new managing director’s
Future Ready strategy, a fi ve-year business renewal program that aims
to make the corporation more customer-focused and sustainable.
A central element of this transformation is a streamlined business
structure that organises our operations into four new strategic
business units.
Firstly, Postal Services brings letters and parcels together to utilise
more effi ciently our unrivalled delivery network. Losses expected
in letters will be offset by our high-performing parcels service, which
is forecast to continue growing on the back of online trade.
Everything we offer in our outlets is managed by the Retail Services
strategic business unit, whose growth will derive from ongoing
expansion of the fi nancial and agency services we offer.
Distribution & Express Services unites our logistics and express delivery
capabilities, including our joint ventures, both in Australia and overseas.
Again, our trusted brand and vast reach are critical to the expansion of
this aspect of the business.
Finally, the e-Services strategic business unit marks the most signifi cant
change in our strategy as it acknowledges the critical place digital
communications have in Australia Post’s future. In concert, rather than
in competition, with our formidable physical assets and capabilities,
e-Services will accelerate our engagement with the digital world.
Already, the Future Ready program has brought about positive changes
in what we do and how we do it. Although improvement to the bottom
line is not expected immediately, we forecast stability in our fi nancial
performance by the end of 2010–11, followed by signs of recovery and,
within fi ve years, rising sustainable profi ts. It’s an exciting time to be part
of Australia Post as we take the next bold step in an ongoing evolution.
Thank you
My sincere thanks to Graeme John for 20 years of outstanding service
to Australia Post, and to our new managing director, Ahmed Fahour, for
so enthusiastically taking up the challenge of writing the next chapter
in the corporation’s history. I also extend my gratitude to the many
thousands of people who are making our new business vision a reality:
the management, staff, licensees, franchisees and contractors who are
getting on with the job of serving our customers around the nation.
To our millions of loyal customers, I also say thank you – for showing
us that Australia Post has an important and valued role to play in
communities everywhere, now and for many years to come. Finally,
I would like to recognise the crucial contribution my fellow board
members have made during this period of profound change and
I thank them for their ongoing support of me in my role as chairman.
David A Mortimer AO
Chairman