Singapore Post reports fiscal 1Q net profit rose 37 percent

Singapore Post post boxes at the SingPost mCentre March 2018.Singapore Post post boxes.

Singapore Post reported Friday its fiscal first quarter net profit rose 37.2 percent on-year to S$25.68 million on a year-ago fair value loss on warrants from an associated company.

The warrants have since been swapped for a direct shareholding, SingPost said.

Underlying net profit rose 3.9 percent on-year to S$25.63 million on improved results from associated companies and joint ventures, SingPost said. The share of loss from associated companies and joint ventures was S$255,000 in the quarter, narrower than the S$3.48 million loss in the year-ago quarter, the company said.

Revenue for the quarter ended 30 June was S$376.38 million, up 1 percent on-year on higher international post and parcel revenue due to cross-border e-commerce deliveries, the postal and property company said in a filing to SGX.

“Amid the backdrop of declining domestic letter volumes and a weaker economic outlook in our key markets, we will continue to navigate our way through the transformation journey, leveraging the continuous growth of e-commerce,” Paul Coutts, group CEO, said in the statement.

“Meanwhile, we remain firmly focused on rolling out our mid- and longer-term measures aimed at improving service levels for our customers in the home market,” Coutts added.

Profit on operating activities dropped 9.9 percent on-year to S$35.32 million, largely on a lower contribution from domestic post and parcel, SingPost said.

The post and parcel segment reported revenue increased 0.7 percent on-year to S$187.3 million, while profit on operating activities fell 8.9 percent on-year to S$37.6 million on lower domestic earnings on a decline in letter mails and admails, SingPost said. That was offset by higher international revenue on higher e-commerce delivery volumes, the filing said.

The logistics segment reported a 2.2 percent decline in revenue to S$119.5 million for the quarter, while the loss on operating activities widened to S$1.8 million from a $900,000 loss in the year-ago period, SingPost said.

The segment’s revenue decline was due to exiting some customer contracts at Quantium Solutions and the Australian dollar’s decline against the Singapore dollar for Couriers Please, the filing said. Without the weaker Australian dollar, the logistics segment revenue would have been nearly stable on-year, SingPost said.

The e-commerce logistics losses widened due to compensation payments received from a customer in the year-ago period, the filing said; excluding the item, e-commerce logistics losses would have been stable, it added.’

The property segment reported revenue fell 1.5 percent on-year to S$29.8 million, while profit on operating activities fell 2.3 percent on-year to S$12.9 million on higher depreciation from the self-storage business’ improvement works, SingPost said.

For the U.S. business, revenue increased 7.9 percent on-year in the quarter to S$55.5 million on higher freight revenues, while the loss on operating activities narrowed to S$6.9 million from a loss of S$8.8 million in the year-ago period on lower depreciation and amortization expenses after property, plant and equipment and intangible assets were written down to zero, the filing said.

SingPost declared an interim dividend of 0.5 Singapore cent a share, unchanged on-year.

In its outlook, SingPost pointed to e-commerce growth.

“With e-commerce volumes expected to continue to grow strongly, in particular in Asia Pacific, SingPost remains well-positioned to benefit over the long term. In Singapore, while e-commerce-related deliveries are expected to grow, the full benefits are being mitigated by a
decline in letter mail and advertisement mail volumes,” SingPost said.

“While International revenue has grown with increased cross-border e-commerce deliveries, transhipment competition is intense with volumes and margins continuing to come under pressure, especially with higher terminal dues,” it added. “The group has stepped up investment to improve service quality, and is also reviewing ways to improve the design of our postal system to drive long-term benefits in a parcel-centric environment.”

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