SingPost Q1 revenue up 12% as e-commerce deliveries climb; profit falls on higher costs

SingPost saw its group profit on operating activities nearly halve to $22 million for the quarter.
SingPost saw its group profit on operating activities nearly halve to $22 million for the quarter.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Singapore Post's (SingPost) group revenue increased 12 per cent to $360 million for its first fiscal quarter ended June 30, 2020, from $321 million in the corresponding period last year.

This was driven by the continued growth in cross-border e-commerce delivery volumes in the international post and parcel business, as well as at the CouriersPlease and Quantium Solutions subsidiaries, the postal service and courier company said in a business update on Tuesday evening (Aug 11).

However, the higher revenue also brought about a corresponding increase in costs as a result of supply chain disruptions. Group expenses grew 22 per cent to $341 million for the April-June period.

SingPost thus saw its group profit on operating activities nearly halve to $22 million for the quarter, from $42 million a year ago, dragged by the higher expenses.

Its financial performance was also dragged by the "adverse impact" the novel coronavirus pandemic had on the group's customers, and doubtful debt provisions could increase over time, SingPost said.

E-commerce volumes rose across the board in Singapore, Australia and internationally for the quarter. SingPost delivered 8.7 million items under the domestic post and parcel e-commerce business, up 52 per cent from the 5.7 million a year ago. "Initiatives such as the new tracked letterbox product facilitated contactless deliveries at a cost-effective price point and saw significant traction among customers," the company said.

As for the international and post and parcel business, cross-border e-commerce volumes grew 30 per cent to 7.2 million kilogrammes in the quarter.

However, volumes of letters and printed papers in Singapore continued to shrink, falling by a third to 100 million items delivered compared with 149 million in the year-ago period.

This downtrend was "expected due to electronic substitution", and was exacerbated by reduced business mailing during the city-state's "circuit breaker" for most of the quarter, SingPost said.

Costs also increased as a result of health and safety arrangements during the Covid-19 situation, including temporary housing for Malaysian employees in Singapore.

In addition, the pandemic caused a "massive disruption" to international air freight out of Changi Airport, which led to delays and increased conveyance costs.

 
 

Separately, the group is implementing its Future of Post initiative to re-engineer the postal business to capture opportunities in smart urban logistics. A key component of this ecosystem will be what SingPost calls the world's first "smart letterbox", which will commence public trials in the next few months.

Shares of the mainboard-listed counter fell $0.01 or 1.4 per cent to finish on Tuesday at $0.70, before the business update was released.