SingPost first-half profit down 12.8% on divestments, weaker e-commerce business

SINGAPORE – Singapore Post is still undertaking its strategic review, with the potential divestment of SingPost Centre continuing to be an option.

This was disclosed during the company’s results briefing on Nov 10 by SingPost’s new chief executive Mark Chong, who took the helm on Nov 1.

“The SingPost Centre houses our sorting system, so it is quite a critical part of our business,” he said.

“I think we recognise what... had been said, but today it is part of a strategic review that we are undertaking within the company. So when we have those plans ready, we will announce them.”

SingPost said in 2024 that it could sell the SingPost Centre in Paya Lebar, which was valued at $1.1 billion as at September 2023.

The postal service provider reported a 12.8 per cent drop in first-half earnings after a string of non-core divestments and as its e-commerce delivery business continued to weaken.

Net profit for the six months to Sept 30 dropped to $19.7 million from $22.6 million in the same period in 2024.

Revenue shrank 27.4 per cent year on year to $188.4 million from $259.6 million previously.

“This drop reflects the challenging operating environment for the logistics business, particularly in cross-border e-commerce delivery volumes,” SingPost said in its filing.

The decline in profit was also largely due to the lack of contribution from its divested Australia business, which offset the exceptional gains from other divestments in the company’s first-half results, SingPost added.

The company’s discontinued operations include its Australia logistics business under SingPost Australia Investments and its subsidiaries, as well as the freight forwarding business of Famous Holdings, Rotterdam Harbour Holdings and subsidiaries of Quantium Solutions.

But SingPost also noted that its efforts to streamline operations post-divestment and cost discipline were reflected in lower operating expenses, which fell 25.5 per cent year on year to $182.4 million.

“Our first-half performance reflects the full impact of the streamlining of our business,” Mr Chong said in a statement.

“This team has delivered a positive start to the first half, despite the persistent weakness in the global logistics and e-commerce sector. We will continue to invest in our infrastructure to further enhance our service levels, while managing our cost base.”

SingPost declared an interim dividend of 0.08 cent per ordinary share for the half-year, which will be paid on Dec 5.

The company’s strategic review is ongoing, and it will provide updates when it is able to, Mr Chong said at the results briefing on Nov 10.

SingPost reorganised into three key business segments on April 1. These are: logistics and letters, the post office network and property assets.

“We have folded the international operations into the domestic operations, and we are a single unit now, so the team has a fair amount of work cut out for it right now to ensure stability in the business,” Mr Chong said.

“So we’ll be focusing on (that) for the immediate term, focusing on the core business, enhancing our operational efficiency, expanding market reach.”

He added that SingPost is also looking at how it can continue to be disciplined in the use of available funds and exercise prudent cost control.

SingPost’s logistics and letters segment – which includes domestic and international mail and parcel and e-commerce logistics – saw first-half revenue fall 33.1 per cent year on year to $153.5 million.

This was due mainly to a 63 per cent plunge in cross-border e-commerce delivery volumes. It was coupled with lower domestic e-commerce volume and the structural decline in letter mail.

The segment recorded an operating loss of $4.4 million, compared with a profit of $13.7 million in the prior period.

The post office network, which derives revenue from agency services and the sale of products, also saw revenue drop by 13.9 per cent.

“The decline was mainly due to lower revenue from agency services, partially offset by higher post office space rental,” SingPost said.

But the segment trimmed its operating losses to $5.8 million from $6.7 million in the prior period as a result of several post offices ceasing operations.

SingPost’s chief operating officer Neo Su Yin said at the briefing that its focus will remain on service quality as it wants to win market share.

The company announced in August that it had sold 10 HDB shophouses housing its post offices for $55.5 million. The properties will be leased back to SingPost as part of its plan to divest its non-core assets while retaining its current post office services.

SingPost is conducting a pilot to allow people to post and return mail from their void decks in 226 blocks across five estates.

The company is also investing $30 million in its Regional e-Commerce Logistics Hub to triple its processing capacity for small parcels to 300,000 a day from 100,000 currently. The hub is expected to begin operating at its expanded capacity around mid-2026.

Mr Chong said there remains much uncertainty in the market, alongside geopolitical issues, but the $30 million investment in the new sorting system is a vote of confidence for the future.

Driven by higher rental income from SingPost Centre, the company’s property assets segment recorded a 3.4 per cent increase in revenue to $40.6 million. The overall occupancy rate at SingPost Centre also rose to 99.2 per cent as at Sept 30.

But operating profit for this segment dipped to $23.9 million from $24.7 million, due largely to higher operating costs.

SingPost shares fell as much as 3.6 per cent to 40.5 cents on Nov 10. The stock pared losses and closed flat at 42 cents.