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SingPost's net profit down 41.2% to $31.4m
Higher cost in eCommerce business hurt its earnings.
Singapore Post reflected a lower net profit during 2Q17, down 41.2% to $31.4m despite strong revenue increase of 22.3% to $321.7m.
According to the group, this is largely because of higher expenses in its eCommerce business relating to the new new Regional eCommerce Logistics Hub. Loss of rental income from the redevelopment of SPC Mall as well as the decline in domestic mail volumes also badgered its bottomline.
SingPost CEO Mervyn Lim said the group is taking a long term view as it build scale for future profitability.
"While financial benefits will not be immediate, initiatives such as the Regional eCommerce Logistics Hub that was opened on 1 November 2016, as well as our deepening collaboration with Alibaba, will strengthen our eCommerce logistics network for future growth,” Lim stated.
Meanwhile, its postal revenue was stable but operating profit declined 10.6%. Cross-border eCommerce-related deliveries rose, mitigating lower domestic letter mail volumes, which were particularly impacted by one-off postings in the previous year from Singapore's SG50 National Day in August and General Election in September, as well as a one-off boost from philatelic sales at the World Stamp Exhibition that was held in Singapore last August.
On the other hand, its logistics revenue slid 1.2 per cent to $154.1 million, with lower contribution from noneCommerce related activities amid a global economic downturn. Operating profit declined 35.6%, due to costs related to the completion of the new Regional eCommerce Logistics Hub, as well as pricing pressures in the eCommerce logistics space.
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