Australia Post first-half profit has slumped 45 per cent as revenue from letters plunges at the fastest rate in the service's 210-year history.
Not even a record Christmas for the mail carrier's parcel service could lift it into the black, with letters burning a $125 million revenue hole in the balance sheet for the six months to December 31.
Despite letter volumes decreasing by 800 million in three years, chief executive Christine Holgate said they would remain a crucial part of the Australia Post service.
"Australia Post will deliver more than two billion letters to almost 12 million homes and businesses this year," she said.
"Although it is shrinking, letters is still viewed as a critical service by the overwhelming majority of Australians."
Interim net profit at the government-owned entity nearly halved to $118 million - down $102 million on a year ago - with overall revenue flat at $3.6 billion.
Parcel revenue was up 9 per cent - or $25 million - to $1.9 billion, including a record 40 million deliveries in December.
Ms Holgate said the overall first-half hit would have been worse were it not for a $50 million delivery savings measure that saw posties carry 40 per cent of Australia Post parcels.
"Our people were exceptional (during Christmas) as they delivered through the most challenging weather conditions, including floods, bush fires and hail storms," Ms Holgate said.
Australia Post group expenses were held at two per cent growth in the first half, underpinned by total productivity savings of $121 million.
In October three of the big four banks agreed to boost investment in banking services at local Australia Post offices, with only ANZ yet to sign the deal.
The service said it was on track to deliver a modest profit for the full year, in the face of ongoing market pressures in the traditionally quieter second half.
Australia Post will release its full results in August.
