The Motley Fool

Australia Post – not just mail delivery

Australia Post has today announced a group profit of $281 million, a jump of 17%, on revenues of $5.1 billion. The government is set to benefit, with Australia post to pay a dividend of $214 million to its owner.

The company announced a range of new products and strategies, including 24-hour parcel lockers made available to most Australians by Christmas, to take advantage of the boom in consumer spending online and future-proofing the business.

Australia Post will introduce 30 super stores and more than 120 locker locations. Once it’s complete, four-out-of-five households will be within a 10 minute drive to one of these outlets. Toll Holdings (ASX: TOL) also has plans to offer out-of-hours pick up points, signing a deal with Victorian newsagents in July this year.

That’s good news for consumers who can’t be at home to receive parcels. This proposal should make it faster and much more efficient, although it may be giving courier companies nightmares.

Additionally, Australia Post will invest $350 million, to help create and distribute its digital mailbox tool, that will allow consumers to receive all correspondence from business and government, electronically and securely.

But, it has a fight on its hands. Salmat (ASX: SLM) and Computershare (ASX: CPU) announced that they were going to build a digital mailbox tool, that does the same thing as Australia Post’s. As the leading share registry in the country, Computershare already distributes the majority of company correspondence to shareholders in Australia.

To increase its parcels capability, Australia Post plans to invest $1.2 billion, including the $400 million it spent recently buying the remainder of courier business Star Track Express from Qantas Airways Limited (ASX: QAN). As part of the same deal, Australia Post also opted out of its partnership in freight business Australian Air Express, with Qantas taking over full ownership.

The one fly in the ointment is the continuing loss in the regulated mail business. Losses in the 2012 year rose to $148 million, due to high fixed costs, lower volumes and no increase in stamp fees for the past two years.

The Foolish bottom line

Australia Post is in the process of adapting itself to the ‘internet’ paradigm. It’s no longer represented just by the postie delivering your mail on weekdays, but a full service company that has its fingers in many pies. Could we see Australia Post listed on the ASX someday? – I wouldn’t bet against it.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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