SINGAPORE – Singapore Post reported on Friday that operating profit for the first quarter ended June 30 grew 11.8 per cent year on year to $11.9 million from $10.6 million in the year-ago period.
This came despite a 15 per cent drop in revenue to $404.1 million from $475.2 million previously.
Operating expenses decreased by 16 per cent to $391.9 million from $466.3 million the previous year, primarily a result of lower volume-related expenses such as conveyance costs, as well as prudent cost management.
The drop in revenue mainly came from the normalisation of shipping rates from Famous Holdings after the Covid-19 pandemic and the decline in sea freight volumes. Operating profit from Famous Holdings dropped correspondingly – however, the group stated that profit margins were preserved.
Excluding Famous Holdings, the group’s operating profit in its logistics segment improved significantly due to the strong growth in its Australia business. On a constant currency basis, first-quarter revenue from the Australian market increased 6.6 per cent year on year, while operating profit increased 34.4 per cent during the same period.
“The Australia business continued to post good growth on the back of new customer acquisitions and volume growth in its fourth-party logistics and last-mile delivery businesses, notwithstanding revenue pressure from lower fuel surcharge following the decline in fuel levies across the logistics industry,” said SingPost.
The group’s international post and parcel business swung into the black as profitability and margins improved significantly from the first quarter of 2022, benefiting from declining air conveyance costs, which fell 37 per cent year on year.
Its domestic post and parcel business, on the other hand, continued to be dragged down by structural declines in the postal service sector.
“The commercial viability of the domestic postal service is currently being addressed and the group is seeking approval from the Infocomm Media Development Authority for postage rate increases in the immediate term to reflect the true cost of the letter mail business,” said the group.
The property segment remained stable for the first quarter, with a retail mall space occupancy rate of 100 per cent and an office space occupancy rate of 97.5 per cent.
Overall, about 86 per cent of SingPost’s revenue is now generated internationally.
The group highlighted that its “balance sheet remained strong” as at June, with key balance sheet items “remaining relatively unchanged” compared with March.
As at June 30, the group had $483.3 million in cash and cash equivalents against $621.8 million in borrowings. Its net debt stood at $138.5 million, up 7.6 per cent from $128.7 million as at March 31.
SingPost will continue to focus on its gradual transition into a logistics business and “identify opportunities in key growth geographies” while implementing “possible divestments and capital recycling initiatives to support further investments in logistics”.
In particular, it will be “integrating its Australia businesses to drive greater synergies” and will explore growth opportunities through acquisitions to build scale and a deeper presence in the Australia market.
SingPost shares ended Friday at 50 cents, up 3.1 per cent or 1.5 cents. THE BUSINESS TIMES
