Ruqayyah Snyder
Australia Post has been able to increase its profits despite shrinking traditional revenue streams. The company's profits rose by A$215.5 million (US$133.9 million) in the first half of the fiscal year 2025 compared to the same period the previous year. This increase in profit can be attributed to a record peak season and the successful execution of its Post26 modernisation strategy. However, the company still faces challenges due to the decline in letter volumes and the need to compete with global disruptors in the parcels sector. To address these challenges, Australia Post has implemented cost-saving measures, streamlined its operations, and focused on transforming the business to secure its long-term viability.
| Characteristics | Values |
|---|---|
| Revenue | $3.86 billion |
| Revenue increase | 1.3% |
| Profit | $249.1 million |
| Profit increase | 641.4% |
| Parcel delivery increase | 3% |
| Number of parcels delivered | 262 million |
| Letter delivery decrease | 10% |
| Number of letters delivered | 98.2 million |
| Losses in letter business | $182.1 million |
| Cost savings | $87.2 million |
| Efficiencies | $140.8 million |
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What You'll Learn
Revenue increase from parcel deliveries
Australia Post has seen a boost in profits, with a recorded 641.4% increase, totalling $249.1 million in profit for the first half of the 2025 financial year. This increase in profit is largely due to a record peak period and the successful implementation of several Post26 transformation initiatives.
The Post26 strategy has been key to Australia Post's improved financial performance. This strategy has focused on simplifying the business, streamlining operations, and modernising the organisation. As a result, Australia Post realised savings of A$87.2 million in the first half of 2025, contributing to the overall improvement in financial results.
The revenue from parcel deliveries has been a significant driver of Australia Post's success. In the first half of 2025, overall parcel delivery increased by 3% compared to the previous corresponding period, with more than 262 million parcels delivered across Australia. This increase in parcel volume has contributed to the rise in revenue for the organisation.
To further enhance their parcel delivery service, Australia Post introduced a new delivery model, which allows postal delivery officers to deliver priority mail, express letters, and parcels daily, while standard letters and unaddressed mail are delivered every second day. This new model enables posties to deliver more parcels during their rounds and supports the growing e-commerce sector.
Additionally, Australia Post launched a next-day delivery service, Australia Post Metro, in Sydney, Melbourne, and Brisbane. This service reflects changing customer needs and provides greater speed, reliability, and convenience. The expansion of Australia Post Metro into other cities is planned for the future, contributing to the organisation's long-term financial sustainability.
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Losses in the letter business
Australia Post has seen a significant decline in its letter business, with letter volumes falling and losses mounting. In the first half of the 2024 financial year, the company reported a $182.1 million loss in its letters business, as letter volumes fell by 11.9%. This downward trend continued in the first half of 2025, with letter delivery declining by over 10% or 98.2 million units. The decline in letter volumes has resulted in significant losses for the segment, with a $83.7 million loss reported.
The continuing structural decline in the letters business has been described as "unstoppable", with Australians receiving fewer letters and relying more on digital communication. The pandemic-induced parcels boom has also waned, impacting the overall performance of Australia Post.
To address these challenges, Australia Post, in collaboration with the federal government, has implemented various initiatives as part of its Post26 strategy. These include increasing the basic postage rate by 10 cents and expanding banking and retail offerings at post office hubs. The company has also focused on streamlining operations, removing costs, closing non-core businesses, and implementing modernization reforms.
While these changes have led to improved financial results, with a $249.1 million profit in the first half of 2025, Australia Post acknowledges that further reforms are necessary to ensure long-term financial sustainability. The company expects the decline in letter volumes to continue and does not anticipate the letter service returning to profitability.
To adapt to changing consumer habits and the digital environment, Australia Post has also trialled a new delivery model, reducing letter delivery to every second day to enable a greater focus on parcel delivery and stem financial losses.
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Cost-saving measures
Australia Post has implemented several cost-saving measures as part of its Post26 strategy to streamline operations and improve financial performance. Here are some key cost-saving initiatives:
- Simplifying the business: Australia Post has focused on simplifying its operations by removing costs, closing non-core businesses, and streamlining processes. This simplification strategy has resulted in significant savings, with A$87.2 million (US$54.2 million) in cost savings realised in the first half of 2025 alone.
- Modernisation reforms: The organisation is also undergoing modernisation reforms, including the implementation of a New Delivery Model. This model involves Postal Delivery Officers delivering priority mail, express letters, and parcels daily, while standard letters and unaddressed mail are delivered every second day. This change allows for more parcel deliveries during each round, supporting the growth of e-commerce and adapting to the decline in letter volumes.
- Disciplined cost management: Through disciplined cost management, Australia Post achieved efficiencies of A$140.8 million in the first half of 2024. This included simplifying the support office, product portfolio, and broader network productivity improvements.
- Price increases: Australia Post has proposed and received preliminary approval for an increase in the Basic Postage Rate (BPR) from $1.20 to $1.50. This price change aims to address the rising cost of delivering letters and reducing letter losses.
- Government support: The Federal Government's modernisation reforms, which Australia Post is well-advanced in implementing, have contributed to improved financial performance.
These cost-saving measures have played a significant role in boosting Australia Post's profitability, with the organisation reporting a 641.4% increase in profit in the first half of 2025 compared to the same period in 2024.
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Modernisation reforms
Australia Post has been implementing modernisation reforms to improve its financial sustainability and ensure it remains a critical part of the country's national infrastructure. The postal company has been facing challenges due to the decline in traditional postal services and the rise of e-commerce, with an increasing number of retail sales being completed online.
The Australian government has been working with Australia Post to improve productivity and revenue in delivery while managing costs. This has involved changes to letter delivery standards and letter pricing arrangements. The government has also sought input from individuals, communities, businesses, and the Australia Post workforce to understand their expectations and needs regarding postal services.
One significant modernisation reform is the Australian Postal Corporation (Performance Standards) Regulations 2019, which came into effect on 15 April 2024. These regulations were amended to address the decline in letter sending, allowing Australia Post to operate more efficiently. The new regulations include a reduction in the frequency of regular letter deliveries, which will now occur every second business day instead of every business day. This change is expected to help Australia Post streamline its operations and reduce costs.
Additionally, the government announced a package of reforms on 6 December 2023, aimed at supporting the long-term financial sustainability of Australia Post. These reforms were developed based on consultations with a diverse range of stakeholders and are intended to modernise the postal service while continuing to support the delivery of traditional postal services.
The modernisation reforms have contributed to Australia Post's improved financial performance, with the company reporting a significant increase in profits. The combination of these reforms, the Post26 strategy, and a record peak season have resulted in positive short-term changes for the business. However, it is recognised that further reform is required to ensure the long-term relevance and financial sustainability of Australia Post in an increasingly competitive market.
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New Delivery Model trial
Australia Post has been working on improving its financial sustainability and long-term viability by modernizing its operations and streamlining its business. This includes the Post26 strategy, which has contributed to a significant increase in profits, with a 641.4% increase in profit compared to the previous year.
As part of the Post26 strategy, Australia Post has been trialing a New Delivery Model in collaboration with the Communication Workers Union (CWU). The trial aims to transform Australia Post into a primarily parcel delivery service, as letter delivery services continue to decline. The New Delivery Model has already been expanded to three additional facilities in New South Wales, Queensland, and South Australia, with more locations to be announced.
The New Delivery Model trial includes walking posties, who requested to be included, and has resulted in an average increase of 20% more parcels delivered. However, this has also led to concerns about increased delivery workloads and the potential loss of full-time jobs for experienced posties.
In addition to the New Delivery Model trial, Australia Post has also been investing in new technologies, such as machine learning, to estimate parcel delivery times and optimize delivery routes. They have also trialed a delivery robot companion, although this received some criticism for being uneconomic and facing practical challenges.
Overall, the New Delivery Model trial is part of Australia Post's efforts to adapt to the changing landscape of the postal industry, with a shift towards parcel deliveries and modernization to ensure long-term financial sustainability.
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Frequently asked questions
Australia Post made a profit of $249.1 million in the first half of 2025, a $215.5 million increase from the same period in the previous year.
Australia Post has been modernising its business model and streamlining operations to improve financial performance. The company has also been focusing on its parcel delivery service, which has seen a continued increase in demand due to the growing e-commerce sector.
The Post26 strategy is Australia Post's initiative to simplify and modernise its business. This strategy has helped the company reduce costs, close non-core businesses, and streamline operations, resulting in significant financial improvements.
Australia Post faces challenges such as declining letter volumes and increasing competition in the parcels sector. The company also needs to address the rising costs of delivering letters and the impact of online services replacing over-the-counter transactions in post offices.
