Singapore Post reported on Friday that its fiscal second quarter net profit fell 12.9 percent on-year to S$25.15 million, largely on an exceptional fair value loss on warrants from an associated company.
SingPost said it swung to a S$2.94 million exceptional items loss in the quarter, from a year-ago S$890,000 gain.
It said that excluding the one-off items, underlying net profit was stable at S$28.1 million on-year, as a 33.5 percent improvement in operating profit to S$39.95 million was offset by losses from associates “investing for growth.”
Revenue for the quarter ended 30 September rose 2.2 percent on-year to S$368.67 million, the postal and logistics company said in a filing to SGX before the market open on Friday.
Ecommerce revenue for the quarter rose 2.2 percent on-year to S$189.1 million, making up 51.3 percent of total revenue, but it posted a loss on operating activities of S$11.2 million, wider than the year-ago loss of S$3.4 million, the filing said.
But it added, “The ecommerce segment saw operating losses rise as the U.S. Businesses were impacted by pricing pressures. Costs also increased due to ongoing initiatives to integrate TradeGlobal and Jagged Peak, as well as investments in automation.”
Property segment profit on operating activities rose 54.1 percent to S$13.3 million on rental income from the SingPost Centre retail mall, which reopened in October 2017, it said. The mall’s committed occupancy rose to 99.1 percent at the end of the quarter from 96.7 percent as of 30 June, it said.
It posted a share of loss from associated companies of S$3.63 million, swinging from a share of profit of S$890,000 in the year-ago period.
“These were largely due to 4PX, our associated company in China, which incurred higher expenses as it continues to invest in warehousing and infrastructure to handle the growth in cross-border ecommerce volumes,” SingPost said.
But it noted that after 4PX issued shares to an existing shareholder, Cainiao, SingPost’s stake in the company, held via subsidiary Quantium Solutions International, was diluted to 19.75 percent from 30.52 percent. That means 4PX is no longer an associated company and will no longer be equity accounted, it said.
SingPost declared a dividend of 0.5 Singapore cent for the quarter, to be paid on 30 November, at the same level as the year-ago quarter.
For the fiscal first half, SingPost reported net profit fell 27.2 percent on-year to S$43.86 million, while revenue rose 2.8 percent on-year to S$741.26 million.
SingPost’s CEO Paul Coutts was fairly upbeat on the results.
“We have shown progress in many parts of our business, including winning in our home market with average daily parcel volumes up 38 per cent from a year ago, as well as improved profitability in the Logistics and Property segments,” Coutts said in the statement. “In the eCommerce segment, we continue to integrate our U.S. businesses for improved efficiency and execution for the coming peak season.”
But the company also pointed to concerns in its outlook: Domestic mail volumes were expected to trend downward and while international mail has increased due to cross-border ecommerce deliveries, transhipment competition was intense, it said.
This article was originally published on Friday 2 November 2018 at 8:41 A.M. SGT; it has since been updated.