Singapore Post said today its domestic mail performance is worsening, but investment in growth areas like ecommerce is continuing, as it recorded a 2.9% drop in net profits for the first quarter of the year.
Although the Singaporean economy shrinking by more than a percentage point in the three months to the end of June 2012, SingPost achieved a 6.5% growth in its overall revenue compared to the same period in 2011, to S$151.6m.
However, with operating costs up 8.8%, to S$118.9m, net profit fell by 2.9% to S$38.1m.
SingPost said not including one-off impacts, its net profit fell 2.2% to S$36.6m, and said part of the fall in profitability was related to its continuing investments for future growth.
Singapore’s universal postal service provider said it saw growth in all three of its main business divisions – Mail, Logistics and Retail. Mail revenue grew 3.7% to S$100.9m, Logistics revenue grew by 11.5% to S57.1m, while Retail revenue increased 12.4% to S$18.6m.
Within the Mail division, international mail and the addition of Hong Kong-based business process outsourcing company Novation Solutions – acquired in May 2012 – countered the financial impact of declining domestic mail volumes.
However, group chief executive Wolfgang Baier said the performance of the high-margin domestic mail business was “worsening”.
Logistics activities benefited from SingPost’s expansion in online retail fulfillment through its Quantium Solutions and Speedpost units.
SingPost’s Retail division saw continuing growth in its financial services and online mall for luxury brands, Clout Shoppe.
Investing for growth
Baier pointed to the positive growth in his company’s overall revenues despite the 1.1% contraction in Singapore’s economy, and commenting on the results said the company’s transformation programme was set to continue.
“We will continue to invest into people, technology and operations as we scale up our businesses not just in Singapore, but in the region,” he said, noting that in part thanks to the expansion of the fulfillment business Quantium Solutions, overseas activity now accounts for 15% of overall group revenue, a three-point increase compared to this time last year.
“While the outlook remains challenging, we are committed to our efforts to transform the business to build a sustainable future for SingPost,” said Baier.
SingPost’s transformation includes efforts to increase productivity and reduce costs, while maintaining high quality services in the domestic market.
The company is exploring new technology to improve efficiency and cut operating costs, recently introducing its new self-help online booking system for shipping customers, ezy2ship.
SingPost also revealed that it is now exploring the possibility of using parcel locker stations to provided added convenience for customers dropping off and picking up parcels at all times of day or night.
“We are really excited with the opportunities in e-commerce and m-commerce, and will be expanding our distribution channels with mobile applications and more self-help services,” said Baier.
“We are also looking to reach out to SMEs going forward. With the decline in high-margin domestic mail, we have to move even faster to offset the impact on profitability.”
As with this quarter last year, SingPost’s Board of Directors has decided to pay out an interim quarterly dividend of 1.25 cents per ordinary share, payable on 31 August.