SingPost Q3 operating profit down 23.8% to $21.1m
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Operating expenses for SingPost’s Singapore and International business units outpaced revenue growth.
PHOTO: ST FILE
Chong Xin Wei
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SINGAPORE - Singapore Post’s group operating profit for the third quarter ended December fell 23.8 per cent to $21.1 million, from $27.7 million in the year-ago period.
The drop in operating profit comes as operating expenses for SingPost’s Singapore and international business units outpaced revenue growth.
“The decline was driven primarily by ongoing macroeconomic pressures, including higher inflation, supply chain disruptions and a highly competitive environment,” SingPost said in a business update on Feb 20.
Group revenue for the quarter rose 12.1 per cent to $510.6 million, from $455.4 million previously. The third quarter is a “seasonally high period” for SingPost’s businesses.
SingPost said the improved top line comes as lower contributions from its Singapore and international businesses were outweighed by revenue growth in its Australia segment and property leasing.
Group operating expenses increased by 14.1 per cent to $490.9 million from $472.7 million.
By segments
The overall delivery volumes in the Singapore postal and logistics business grew 3.4 per cent, as letter mail volume growth offset lower e-commerce volumes due to service performance issues.
But year on year, revenue fell due to lower contributions from logistics, financial and other services.
The lower top line, along with high operating costs, resulted in an operating loss in the Singapore postal and logistics business, compared with a profit in the year-ago period, said SingPost.
Property leasing revenue improved on the year due to higher rental income from SingPost Centre. Overall occupancy rate at the property was 98.2 per cent as at Dec 31, 2024, compared with 96.2 per cent as at March 31, 2024.
For SingPost’s international business, revenue fell on the year due to a 29.6 per cent year-on-year decline in volumes.
“The continued contraction in cross-border e-commerce volumes and challenging business conditions resulted in an operating loss for the cross-border segment during the quarter,” said the national postal services provider.
Freight forwarding revenue and profit improved on the year due to higher sea freight rates.
SingPost’s Australia business recorded higher revenue and operating profit year on year, mainly due to Freight Management Holdings’ consolidation of Border Express, following its acquisition last March.
Outlook
Looking ahead, SingPost intends to “progressively divest and unlock the value of non-core businesses and assets”.
Following the divestment of the Australia business, SingPost will review its group strategy and reset it in due course.
The group intends to focus on building market share and maximising capacity utilisation, while reviewing its customer service for its Singapore business.
“Adjustments will be made to some post offices and locations to ensure that postal services remain cost-effective and relevant,” said SingPost.
It expects its international business to face increasing challenges amid a “volatile global environment” for e-commerce logistics.
“These challenges, driven by trade disputes, geopolitical conflicts and evolving regulatory requirements, are expected to have a prolonged impact on the international cross-border business,” said SingPost.
The company will lay off around 45 employees
The cuts mainly affect SingPost’s corporate support units, though a small number will come from its international business unit, which was involved in a whistle-blowing incident that led to the firing of three senior SingPost executives, including its group chief executive.
The company said the layoffs were unrelated to the whistle-blowing reports or any previous incidents.
SingPost shares fell 0.5 cent, or 0.9 per cent, to 55.5 cents on Feb 20. THE BUSINESS TIMES
