Postal services firm Singapore Post sank deep into the red in its fourth quarter, hit by a hefty impairment for the underperforming United States e-commerce firm TradeGlobal, which it acquired in 2015.
SingPost also cut its dividend to 0.5 cent per share for the three months to March 31, markedly down from 2.5 cents a year ago.
The firm suffered a fourth-quarter net loss of $65.2 million, reversing the net profit of $105.4 million for the same period last year.
SingPost had warned in February that TradeGlobal had been performing poorly and its value on the firm's books could be significantly impaired. The firm said yesterday that it recorded substantial impairment charges of $208.6 million, of which $185 million was for TradeGlobal.
These charges were offset by a $108.7 million fair value gain related mainly to SingPost Centre, it announced at 8pm.
"It is unfortunate that such a significant impairment to the TradeGlobal acquisition has to be made so soon after the transaction. A turnaround plan is being executed with the objective of recovering as much value as possible for shareholders," noted chairman Simon Israel.
AT A GLANCE
REVENUE: $324 million (+2%)
NET LOSS: $65.2 million (reversal from net profit of $105.4 million last year)
FINAL DIVIDEND: 0.5 cent per share
It is unfortunate that such a significant impairment to the TradeGlobal acquisition has to be made so soon after the transaction. A turnaround plan is being executed with the objective of recovering as much value as possible for shareholders.
MR SIMON ISRAEL, SingPost chairman, on the impairment for TradeGlobal, a US e-commerce firm acquired by SingPost in 2015.
TradeGlobal has "significantly underperformed the business case which supported the investment", SingPost added.
Instead of a projected profit of $9.4 million for the 2016/2017 fiscal year, the e-commerce firm chalked up a loss of $25.8 million - faced with challenges like higher labour costs, disruption in the US fashion retail sector, and the loss of two large customers. SingPost said TradeGlobal is not expected to be profitable for the financial year ending March 31 next year.
"We are addressing the productivity issues in labour, the process flows within the warehouse system," said covering group chief executive Mervyn Lim on turnaround plans for TradeGlobal.
A review on SingPost's acquisition of TradeGlobal is under way and findings are expected to be released before the firm's annual general meeting in July.
Fourth-quarter revenue rose 2 per cent year on year to $324 million from $317.6 million - driven largely by the e-commerce segment. Quarterly loss per share was 3.03 cents, compared with earnings per share of 4.36 cents a year ago. Net asset value per share rose to 77.3 cents as of March 31, from 72.26 cents a year earlier.
SingPost booked an 86.6 per cent drop in full-year net profit to $33.4 million, while revenue came in at $1.35 billion, up by 17.1 per cent from the previous year.
The counter closed unchanged at $1.39, before the release of results.