Australia Post has turned into a “two speed business” as growth in online shopping led to a 31 per cent increase in pre-tax profit while traditional mail volumes declined.
The government-owned corporation predicts online spending will double in the next five years, with parcel revenue tipped to increase to around $2.5 billion by 2015.
Chief executive Ahmed Fahour said online shopping would drive business growth with 70 per cent of the $1.36 billion in parcels revenue generated by e-commerce.
“It is the powerhouse of our business,” Mr Fahour told AAP.
He said parcel portfolio volume growth of 10.9 per cent drove parcels revenue up 5.3 per cent and resulted in 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,” Mr Fahour said.
Australia Post recorded a pre-tax profit of $332.3 million, up 31 per cent from $253 million in fiscal 2010, as it worked to grow market share of its parcel business and expanded its range of services.
Revenue rose 2.8 per cent to $5.01 billion, despite letter volumes declining by three per cent for the fourth year in a row.
It is the first time in four years that Australia Post’s revenue growth has outstripped cost growth.
Mr 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.
“We’re not going into forecasts, but what we are saying is one part of our two-speed business has an enormous upside,” Mr Fahour 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.
The trend towards buying from overseas websites is expected to increase to 50 per cent of online purchases by 2015.
While 70 per cent of Australia Post’s parcels ordered online were currently mailed domestically, that figure was likely to decline to 60 per cent as more Australians shopped on overseas websites.
The result comes amid a global decline in mail as people 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.
On Monday, Australia Post announced it had extended the operating hours of parcel pick-up points and would trial 24-seven accessible parcel lockers.
It will focus on providing lockers capable of handling packages weighing up to 32 kilograms, covering 90 per cent of purchases online.
Australia Post also reported strong revenue growth in eParcels thanks to key clients such as eBay, JB Hi-Fi, Deals Direct, Grays Online and Catch of the Day.
Apple and Austar were major clients of the eParcel Post Returns product.
