Singapore Markets closed

SingPost delivers 37.2% jump in 1Q earnings to $25.7 mil even as logistics, US business segments flounder

Benjamin Cher

SINGAPORE (Aug 2): Singapore Post (SingPost) has delivered higher earnings in the 1Q19/20 ended June, despite losses in its logistics and US business segments.

Earnings jumped 37.2% to $25.7 million, up from $18.7 million a year before.

This resulted in earnings per share of 0.98 cent in 1Q19/20, up 48.5% from 0.66 cent in 1Q18/19.

The bottomline increase was mainly due to the absence of exceptional fair value loss on warrants last year from an associated company, GD Express.

The proceeds from the sale of the warrants were used to increase SingPost’s shareholding in GD Express, which meant that the logistics counter no longer needed to recognise fair value losses or gains from the warrants in 1Q19/20.

Underlying net profit rose 3.9% to $25.6 million, from $24.7 million a year ago, on the back of improved results from associated companies and joint ventures.

1Q19/20 revenue edged 1.0% higher to $376.4 million, from $372.6 million the year before.

The increase was driven by higher International Post and Parcel revenue arising from cross-border e-commerce deliveries.

Starting April, SingPost has reclassified the reporting of its various business units into four key business segments: Post and Parcel, Logistics, Property and US Business.

The Post and Parcel segment comprises the core postal and parcel delivery business, both domestic and international, as well as products and services at post offices.

Logistics comprises the freight forwarding and e-commerce logistics, including front-end e-commerce solutions, warehousing, fulfilment, delivery and other services in Asia Pacific.

The US Business segment comprises Jagged Peak and TradeGlobal, while the Property segment includes commercial property rental and the self-storage business.

Revenue growth was mixed across the business units, with the Post and Parcel and US Business segment recording revenue increases, partially offset by shrinking revenues at Logistics and Property.

Post and Parcel recorded a 0.7% increase in revenue to $187.3 million, while US Business revenue jumped 7.9% to $55.5 million.

The increases for Post and Parcel was driven by higher cross-border e-commerce-related delivery volume, and offset by a 6.7% decline in domestic mail delivery due to continued letter mail decline and suspension of ad-hoc admail volumes to improve service quality.

Higher freight revenues drove US Business revenue growth. However, outsourced expenses to third party vendors for deliveries rose disproportionately, and negatively impacted the business.

The US business narrowed their operating losses by 21% to $6.9 million in 1Q19/20, down from an operating loss of $8.8 million last year.

This was mainly due to an absence of depreciation and amortisation expenses, as property, plant and equipment, and intangible assets had been written to zero at the close of the 2018 financial year.

SingPost is still looking to exit the US market with a sale of the US businesses, and says it in in the midst of a sale process.

Meanwhile, the Logistics segment saw the biggest drop in operating profit, with losses nearly doubling to $1.8 million.

While freight forwarding has remained stable despite a global slowdown in trade, e-commerce logistics losses widened due to compensation payments received from a customer last year.

The board of directors has declared an interim dividend of 0.5 cent per share, to be paid on Aug 31. There was no interim dividend declared in the corresponding period last year.

“Amid the backdrop of declining domestic letter volumes and a weaker economic outlook in our key markets, we will continue to navigate our way through the transformation journey, leveraging the continuous growth of e-commerce,” says Paul Coutts, group chief executive officer, SingPost.

“Meanwhile, we remain firmly focused on rolling out our mid- and longer-term measures aimed at improving service levels for our customers in the home market,” he adds.

As at 11.31am on Friday, shares in SingPost are trading 2 cents higher, or up 2.1%, at 98 cents.