SingPost Reports Flat 3Q Earnings as e-Commerce Services Expand

Singapore Post Limited (SingPost) has reported a year-on-year revenue increase of 30.2% to S$222.6 million for the third quarter ended 31 December 2014 thanks to contributions from acquisitions and growth in e-Commerce-related activities. However, net profit of the country's postal services provider was flat at S$39.4 million and without contributions from acquisitions, revenue increased by only 9.3% year-on-year.

SingPost CEO Dr Wolfgang Baier  /  company courtesy
SingPost CEO Dr Wolfgang Baier / company courtesy

Overall mail revenue for 3Q 2014 grew 12.8% to S$133.2 million, as growth in e-Commerce packages lifted domestic and international mail revenue, despite the fact that domestic mail volume continued its decline. It is now the eighth consecutive quarter where the company has seen its mail volume drop.

Volumes down, cash flow up
On the other hand, revenue for the logistics business grew by 64.5% to S$101.2 million. In Retail & e-Commerce, revenue decreased by 6.1% to S$22.6 million while rental and property-related income rose by 1.9% to S$11.4 million.

While SingPost’s reported profits had remained flat, the company managed to achieve a 30.8% year-on-year increase to S$39m in its operating cash flow. With only S$6.3m spent on capital expenditures, the company had managed to bring in S$32.7m in free cash flow.

Non-mail biz grows double-digit
Commenting on the quarter’s results, SingPost Group's chief executive officer, Dr Wolfgang Baier, said: “We are seeing encouraging results from our transformation efforts especially from the new investments as well as new business areas such as e-Commerce and related activities.

"For the first nine months of FY 2013/14, our revenue mix has shifted quite significantly, with non-mail business contributing 45.7% to Group revenue, up by 10% from a year ago. Overseas revenue has similarly risen by 10% to 27.8% as the Group continues to expand our regional logistics business,” Dr Baier added.

New e-Commerce logistics hub planned
In the future, SingPost is looking to increase growth in its e-Commerce and logistics businesses, both organically and via investments. It is focused on building end-to-end e-Commerce logistics solutions in the region which involves the company helping to meet customers’ needs in freight, warehousing & fulfillment, last mile delivery & returns and front-end web solutions.

SingPost recently announced that it will be developing a fully integrated regional e-Commerce logistics hub to cater to its expanding e-Commerce logistics business and the fast-growing e-Commerce market.

The three-storey hub in Tampines LogisPark will be the first of its kind in SE Asia, equipped with state-of-the-art technology. Scheduled to be fully operational in 2H16, the estimated development cost is S$182m, and includes lease of land, construction costs and equipment costs. This will be funded internally from cash.

Nol van Fenema

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