2009-10 Annual Report - Australia Post

AUSTRALIA POST HAS ALWAYS BEEN
IN THE BUSINESS OF COMMUNICATION
AND DELIVERY, BUT WE HAVE
CONTINUALLY ADAPTED OUR SERVICES
TO CHANGES IN TECHNOLOGY AND
CUSTOMER DEMANDS.
As the world economy advances further into the digital age, it’s time to realign what we do and
how we do it. Therefore, we’re rebuilding Australia Post today so that it will continue to be a
trusted service provider well into the future – for all Australians.
Time for change
For many years, Australia Post delivered consistently increasing profi ts,
largely due to our strong letters business. Letter volumes had always
grown in tandem with GDP; by the 1990s, the volume of letters sent
in Australia was increasing by an average of 5 per cent annually.
This link between letter volumes and GDP was broken as we entered
the twenty-fi rst century, when the exponential growth of digital
communications began to have an impact on physical mail. And yet,
for some years, volume growth continued – albeit slowly – and so
did Australia Post’s profi ts.
However, by 2008 the global fi nancial crisis had not only dulled
economic activity but accelerated the switch to cheaper digital
communication options, such as email. Letter volumes declined
dramatically around the world – including in Australia, where a
drop of 4.2 per cent resulted in our letters business being only
marginally profi table in 2008–09.
By 2009–10, Australia Post’s letters service operated at a loss. While
volumes are expected to continue declining, our costs will continue
to increase as our delivery workload expands by more than 100,000 new
addresses each year. Despite our ongoing efforts to improve effi ciency
and reduce costs, current projections point to deeper losses for our
letters service and smaller profi ts for the business. (Our pre-tax profi t
has effectively halved over the past two fi nancial years.)
If we do not take action now to reform our business model, Australia Post
will lose money in the next few years. This is not an option.
We want Australia Post to be a thriving business so that we can
continue serving the nation and delivering dividends to our shareholder,
the Commonwealth Government. We need to develop new services
for both the real and digital economies so as to capitalise on our
existing strengths: our trusted brand, reliability, and retail and
distribution networks unrivalled in Australia. We need to adapt to
the changing needs of our customers by responding to the challenges
of the twenty-fi rst century and grasping its opportunities.
In short, we need to get ready for the future, which is why on
20 April 2010 we announced our Future Ready business renewal
program. Its purpose is to transform Australia Post into a far more
2 AUSTRALIA POST ANNUAL REPORT 2009–10 | REPORT OF OPERATIONS
customer-driven, sustainable, high-performing and fi nancially viable
business. Following a busy design phase, the Future Ready roll-out began
on 1 July 2010, with full implementation expected by 1 October 2010.
Our new structure
The new organisational structure, which came into effect on 1 July 2010,
is aligned with the needs of our modern customers – both existing and
new – thereby positioning the business for growth. It comprises four
customer-centric and profi t-focused strategic business units:
• Postal Services
• Retail Services
• Distribution & Express Services
• e-Services.
The Postal Services strategic business unit will be fi nancially
self-sustaining, as any losses in letters will be offset by the volume
and revenue growth expected in parcels. Australia Post is already the
nation’s leading provider of business-to-consumer parcel deliveries.
This places us in an excellent position to reap rewards from the
expansion of online shopping, which is projected to grow strongly
over the coming decade.
The Retail Services strategic business unit encompasses all products
and services offered in Australia Post’s retail outlets. The suite of
offerings will continue to evolve to meet customers’ needs, but we
are particularly ambitious in our plans to expand the type of services
available. We will invite more and more businesses and government
agencies to use our vast retail network as a shopfront, so that
Australia Post becomes the place for millions of customers to
access a veritable supermarket of services.
The goal of the Distribution & Express Services strategic business
unit is to win a greater share of the business-to-business market, in
Australia as well as in Asia. The former business structure dispersed
our distribution capabilities across the corporation, impeding the
potential for growth. By gathering all of these services into one
dedicated business unit, we expect to improve integration, leading
to growth with new and existing customers.