Singapore Post fulfills dividend promise despite profit dip

Singapore Post’s core business stayed resilient despite the tough economic conditions it faced in its financial year ended March 31. This resulted in operating revenue dipping a marginal 1.3 per cent to USD368.2 million and net profit falling just 4 per cent to USD104.3 million.

As it posted its first post-IPO full-year results, SingPost also delivered its dividend promise. It proposed a final net dividend of 2.1 cents a share amounting to a payout of USD40 million. This, together with the interim dividend paid in January this year, brought total payment to USD80 million, or almost 77 per cent of net profit.

The fourth quarter actually saw a 10.3 per cent rise in net profit to USD28.9 million as SingPost benefited from lower taxation. Q4 operating revenue rose 1.6 per cent to USD92.5 million.

For the full year, apart from the impact of Sars and the Iraq war, a major cause of the profit fall was a 19.1 per cent drop in other operating income to $17.1 million due to lower rental yields and the loss of rental income from Crosby House which was sold in the previous year.

SingPost chief executive Tan Soo Hock said it had hired a consultant to prepare a report on ways to maximise yields on its main property, the SingPost building. Occupancy had fallen to about 89 per cent from more than 92 per cent last year, said Mr Tan.

Mr Tan said the group aims to have a consistent dividend policy, which reflects its current desire to maintain – and potentially increase – dividend levels.

SingPost also gave an update on the progress of its pawn shop business which it refers to as ‘secured personal finance’.

Victor Ow, SingPost’s senior director for financial services, said that the first two of 20 outlets for the new pawn shop business were under construction at Bedok and Yishun central and were expected to open on schedule in June.

Other parts of the planned financial services business including small-value remittances, postal assurance, business cashflow management and micro hire-purchase schemes were being finalised.

Funding and credit underwriting arrangement are currently being discussed with several ‘international names’ in financial services.

‘We are finalising a deal with some payment companies to extend the reach in the market,’ said Mr Ow without quoting names, citing a non-disclosure agreement with third parties.

SingPost shares ended one cent up at 82 cents yesterday, against its 52-week high and low of 89.5 and 63 cents respectively.