SingPost posts 13.6% drop in Q1 profit as domestic mail volume fell

Singapore Post reported on Friday a 13.6 per cent drop in first-quarter net profit.
Singapore Post reported on Friday a 13.6 per cent drop in first-quarter net profit. PHOTO: ST FILE

SINGAPORE - Singapore Post reported on Friday (Aug 4) a 13.6 per cent drop in first-quarter net profit to S$31 million from S$35.9 million in the year-ago period.

This was despite a 6.2 per cent year-on-year rise in revenue for the three months to end-June to S$354.1 million from growth in its postal and logistics businesses.

But SingPost said underlying net profit fell 24.7 per cent, due mainly to lower domestic mail volumes, costs from planned investments, increased competition in the logistics segment, and associates that were investing for growth.

An interim dividend of 0.5 Singapore cent per share was declared, down from 1.50 cents a year ago.

SingPost said strong international mail growth drove postal revenue to a 9.3 per cent increase, even as domestic mail revenue decreased with more organisations moving to electronic statements.

Cross-border eCommerce-related deliveries rose, especially with increasing volumes from the Alibaba Group. But even as profits from such transhipment activities increased, they were insufficient to offset the decline in domestic mail earnings, resulting in postal operating profit decreasing 13.7 per cent.

Logistics revenue increased 6.1 per cent as SP Parcels and CouriersPlease made more eCommerce-related deliveries, and as Famous Holdings saw higher contributions from its overseas operations. Quantium Solutions, however, was hit by competition in North Asia, which negated improvements in the utilisation of the Regional eCommerce Logistics Hub in Singapore.

SingPost said the challenges in North Asia, along with costs from planned investments to build out SingPost's eCommerce logistics network, caused logistics operating profit to fall 39.3 per cent.

It said ecommerce revenue declined and operating losses rose from a year ago, due mainly to TradeGlobal, which has lost two of its largest customers as announced previously.

Moving forward, SingPost said it will focus on raising volumes and utilisation of its network to improve economies of scale and operating leverage.

The retail mall at the new SingPost Centre is expected to open in October and the group will begin to recognise rental income progressively from the second half of FY2017/18.