Australia Post profits down 56%; Vocation books $245 million writedown as asset sales continue: Midday Roundup

Growing losses in Australia Post’s letter delivery service have been blamed for a 56% fall in the organisation’s profits for the first half of the 2014-15 financial year.

Australia Post reported after tax profit of $98 million for the six-month period, down 56% compared to the first half of the 2013-14 financial year.

Losses in the Australia Post letter delivery business totalled $151 million for the period, a drop of 57% from the previous corresponding period. Letter volumes dropped by 8.2%, which Australia Post said is the largest decline recorded since letter volumes began to decline in 2008.

The losses are set to continue, with Australia Post projecting its first company-wide full year loss for the first time since 1982.

Ahmed Fahour, Australia Post managing director and group chief executive, said in a statement the poor results highlight the need for “urgent” regulatory reform of Australia Post’s letter service to allow the carrier to adjust prices for its proposed two-speed letter delivery service.

“The immediate challenge for our business is clear,” Fahour said.

“We have been carefully managing the real decline in our letter volumes for the past seven years. But we have not reached a tipping point where we can no longer manage that decline, while also maintaining our nationwide networks, service reliability and profitability.”

Vocation books $245 million writedown as asset sales continue 

Troubled training provider Vocation has revealed a non-cash writedown of its intangible assets of between $235 million and $245 million, as the company continues to seek a buyer.

Vocation has been in a trading halt on the Australian Securities Exchange since mid-January, pending a strategic review of operations.

In its announcement to shareholders today, Vocation said the review aims to significantly reduce debt and achieve sustainable capital structure.

Vocation said 30 expressions of interest have been received for the struggling business, including “major global and national providers” in the education sector.

In November, a class action was launched against Vocation, claiming it had misled investors. Chairman John Dawkins quit the company the same month.

Shares up on open

Aussie shares have traded higher this morning, following consecutive days in the red last week.

Tristan K’Nell, head of trading at Quay Equities, said in a statement local investors have been buoyed by confirmation of the Greece bailout but will be busy today digesting a “mixed bag” of corporate results from the likes of Lend Lease, Caltex and Australia Post.

“Market turnover into lunch is steady at $1.217 billion, however given no significant economic releases into the region, expect a little less action in the afternoon section,” K’Nell said.

“I’m also expecting a flat finish with no real reason to push higher after the mixed bag or reporting from this morning. China, Taiwan and Vietnam are also still closed for the Chinese New Year holiday.”

The S&P/ASX 200 benchmark was up 24.6 points to 5906.1 points at 12pm AEDT. On Friday, the Dow Jones closed 154.67 points higher, up 0.86% to 18140.4 points.