Singapore Post (SingPost) posted a net profit of $30.9 million for the first half of the fiscal year ended September, down 42.1 per cent from $53.4 million in the corresponding period last year.
Earnings per share fell to 1.04 cents, down from 2.57 cents a year ago.
In a bourse filing yesterday, the group attributed the decline in bottom line figures to a "sharp rise" in international conveyance costs and labour-related expenses due to the Covid-19 pandemic.
The fall in net profit was despite a 9.6 per cent increase in revenue to $707.8 million from $645.6 million last year, spearheaded by growth in the group's post and parcel as well as logistics segments.
SingPost said this was due to strong e-commerce volume growth across the group.
But the group reported increases across most of its expense categories, which weighed on its margins. In particular, volume-related expenses rose by 26.7 per cent to $429.2 million, in line with higher e-commerce volumes.
Segmentally, revenue from SingPost's post and parcel segment rose 5.2 per cent year on year, amid a 43 per cent rise in domestic e-commerce volume growth. The group added that initiatives such as its new tracked letterbox product were well received by customers.
Volumes of letters and printed papers continued to decline due to electronic substitution. The group also faced higher costs with additional health and safety arrangements for Covid-19, such as housing arrangements for its Malaysian employees.
Revenue from the logistics segment also rose 20.3 per cent on the back of increased e-commerce activities.
SingPost said the cross-border e-commerce volumes of its international post and parcel business remained "largely resilient" despite a 96 per cent reduction in passenger fleet due to the pandemic.
The segment's margins, however, were eroded by higher costs due to long delays and limited cargo space.
The property segment's revenue fell 7.8 per cent to $55.5 million in the period, due primarily to rental rebates provided for eligible tenants that amounted to about $3.2 million, as well as lower receipts from carpark and atrium sales.
Due to the uncertain outlook, the group has declared an interim dividend of 0.5 cent per ordinary share, half that of the dividend of one cent in the period last year. The dividend is expected to be paid out on Dec 2.
SingPost chief executive Paul Coutts said: "Despite the strong demand for our logistics and delivery services, margins for some of our business segments have been eroded through higher costs associated with Covid-19, and we expect this to be the case for as long as the global pandemic continues.
"While we remain optimistic in the strategies taken to reposition ourselves for the new normal, Covid-19 continues to pose significant challenges to the operating environment for businesses."
Looking ahead, SingPost said its earnings and operating cash flows will continue to face headwinds from disruptions to businesses. The extent and duration of these headwinds will depend on when the pandemic eases, the group warned.
It added that it is carefully managing its expenses, cash flows and liquidity, and will continue to seek out opportunities to strengthen its competitiveness and capabilities in its key markets.
THE BUSINESS TIMES