SingPost: some of our business segments have been eroded through higher costs associated with Covid-19
Singapore Post has announced its financial results for the first half of the fiscal year with revenue rising 9.6% to S$707.8 million, fuelled by strong e-commerce volumes but net profit declined 42.1% to S$30.9 million and profit on operating activities declined 50.9% to S$39.8 million, as Covid-19 disruptions led to a sharp rise in international conveyance costs and labour-related expenses.
SingPost announced on 19 September 2019 that its U.S e-commerce subsidiaries, Jagged Peak and TradeGlobal, filed for voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States.
Following the announcement, SingPost has since deconsolidated the financials for the U.S. businesses from the rest of the Group, and will no longer recognise profit or loss from the U.S. subsidiaries. As such, since the half year ended 30 September 2019, the consolidated financial statement of the Group is presented as ‘Continuing Operations’, which excludes the U.S. subsidiaries. Losses from the U.S. subsidiaries for the same period are presented as a single line item in the financial statement as ‘Discontinued Operations’.
Revenue for the first half of the year rose 9.6% to S$707.8 million, led by growth in the Post and Parcel as well as Logistics segments, with strong e-commerce volume growth across the Group.
However, profit on operating activities declined 50.9%, as the Group incurred higher costs on eCommerce volume growth, exacerbated by Covid-19 related disruptions, in particular, severe escalation of cross-border conveyance costs as a result of flight disruptions.
Correspondingly, net profit attributable to equity holders declined by 42.1% to S$30.9 million in the first half of the year, and the Group recorded an underlying net profit of S$31.5 million, down 40% from the previous year.
Mr Paul Coutts, Group Chief Executive Officer, said: “SingPost is capitalising on the growth in eCommerce, which has resulted in our rise in revenue, off-setting the decline in letter mail volumes in the Domestic Post and Parcel segment.
“Despite the strong demand for our logistics and delivery services, margins for some of our business segments have been eroded through higher costs associated with Covid-19, and we expect this to be the case for as long as the global pandemic continues.
“While we remain optimistic in the strategies taken to reposition ourselves for the new norm, Covid-19 continues to pose significant challenges to the operating environment for businesses. Therefore, we remain judicious in managing our expenses, cashflow and liquidity, even as we execute our key strategic initiatives such as the Future of Post and recent investment in Australia in order to secure our future,” said Mr Coutts.