SingPost benefiting from acquisitions, as business shifts towards e-commerce

SingPost benefiting from acquisitions, as business shifts towards e-commerce

Singapore Post is generating considerably more revenue from non-postal business this year, as its traditional mail activities come under increasing pressure. SingPost said today that in the first nine months of its 2013/14 year, non-mail business has contributed 45.7% of revenues, up by 10% compared to a year ago.

The company’s regional expansion strategy has also seen international revenue increase its contribution to Group revenues by 10%, to 27.8% of revenues overall.

The move comes on the back of various investments the company has made, including acquisitions, in areas like e-commerce and logistics.

At the same time, in third quarter results issued today, SingPost said its domestic mail volumes declined for the eighth quarter running.

Overall, Group revenue grew 30.2% year-on-year in the third quarter of 2013/14, to S$222.6m, thanks in large part to e-commerce popularity. Discounting the contributions of acquisitions, revenue in the quarter would have grown 9.3% year-on-year.

However, with SingPost currently investing to build on growing business areas, the company’s net profits were flat compared to last year’s third quarter, sticking on S$39.4m. Expenses grew 34.4% on the back of acquisitions, to S$184.4m for the quarter.

In the nine months of the financial year so far, SingPost’s revenue has grown 31.8% year-on-year, to S$627.8m, with net profit up 1.8% to S$112.3m.

Dr Wolfgang Baier, the SingPost chief executive, said the results of the company’s transformation efforts were “encouraging”, particularly the performance of new investments and new business areas like e-commerce.

He said his company is now investing to accelerate growth in its e-commerce and logistics businesses — both organic growth and via acquisitions.

Baier said: “Our focus is on building end-to-end e-Commerce logistics solutions in the region – freight, warehousing & fulfillment, last mile delivery & returns and front-end web solutions. Several other major customers have come on board to leverage our e-Commerce solutions including Canon, Philips and Toshiba. We see good growth potential in this space and we are ready to tap the opportunities.”

Investment

While domestic volumes continued to fall, SingPost said its domestic mail revenues were able to grow thanks to the increase in e-commerce package volumes. Q3 revenue grew 12.8% year-on-year to S$133.2m.

SingPost’s Logistics division was assisted by acquisitions of General Storage Company and Famous Holdings, taking revenues up 64.5% to S101.2m in the third quarter. Without the acquisitions, the division’s revenue would have grown 4.3% in the quarter thanks to regional e-fulfillment activity.

The retail and e-commerce division, which includes postal counter activity and SingPost’s own e-commerce websites, saw revenue down 6.1% year-on-year in the third quarter, to S$22.6m.

Baier said his company was looking to invest “significantly” in the traditional mail business despite the declining volumes.

“We remain committed to providing our Singapore customers a better service experience as we take our public service obligations very seriously,” he said.

“Installation of the new integrated sorting machines costing S$45 million will start later this month. When fully operational at the end of the year, these new machines will increase letter sorting capacity by 17% and mechanisation rate to 95%, improving efficiency and accuracy at the same time. We are also introducing more 24/7 touch-points for the convenience of our customers; for example today we have 30 conveniently-located POPStations where customers can pick and return parcels. We are committed to drive product and service innovation to raise the level of customer experience to the next level.”

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