SingPost’s annual results “healthy”
SingPost’s strong performance in Q4 left the company describing full-year 2009 financial results as “healthy”. In the fourth quarter, Group revenue grew 15.8% to S$133.8m with growth attributable to better performance in all business segments and the consolidation of revenue from wholly-owned subsidiary Quantium Solutions.
On a comparable basis with the same quarter last year when Quantium Solutions was a joint venture, Group revenue rose by 3.8%.
Mail business posted a 4% increase in revenue to S$92.2m, from higher contributions in domestic mail, international mail and hybrid mail. Logistics business recorded a 161.9% jump in revenue to S$44.7m mainly attributable to the inclusion of Quantium Solutions.
On a comparable basis with the same quarter last year, Logistics revenue improved on growth in trans-shipment activities and vPOST shipping contributions. Retail business saw a 2.9% increase in revenue to S$16.6m on the back of higher contributions from financial services and retail products.
Rental and property-related income grew 5% to S$10.2m, from higher rental income from Singapore Post Centre and the leasing of space at the repurposed post office buildings.
Total expenses rose 19% to S$103.5m, mainly due to the consolidation of Quantium Solutions. Excluding Quantium Solutions, total expenses would have increased at a lower rate of 6%.
Net profit grew 15.8% to S$40.9m. Excluding one-off items, such as benefits from the Jobs Credit Scheme, amortisation of deferred gain on intellectual property rights and the impact of the reduction in corporate tax rate last year, the underlying net profit rose by 12.0% to S$36.5m.
Healthy FY2009/10 results
For the full year, Group revenue grew 9.2%, bolstered by the consolidation revenue from Quantium Solutions. On a comparable basis with the previous financial year when Quantium Solutions was a joint venture, Group revenue declined by 2%. This was due to the weaker operating performance in the first half of the financial year as a result of the poor economic environment. The Group’s operating performance picked up in the second half, following the improvement in business conditions.
Mail revenue recorded a decline of 2.3% to S$360.2m due mainly to lower contributions from domestic and international mail. Logistics revenue increased to S$173.9m with the inclusion of Quantium Solutions. Excluding Quantium Solutions, Logistics revenue decreased as a result of lower Speedpost contributions.
Retail revenue posted a 2.4% growth to S$66.9m, as higher contributions from financial services and retail products offset the decline in revenue from agency services.
The Group’s rental and property-related income grew 20.9% to S$40.4m. The growth was underpinned by higher rental income from Singapore Post Centre and the leasing of space at the repurposed post office buildings.
The Group’s total expenses increased 12% to S$384.8m. Excluding Quantium Solutions, total expenses would have declined by 0.7% as a result of the Group’s cost-cutting measures.
Cash flow generation for the Group remained healthy, with net cash from operating activities amounting to S$208.0m in FY2009/10, compared to S$170.3m in the previous year. Free cash flow (net cash inflow from operating activities less cash capital expenditure) amounted to S$196.1m for FY2009/10, compared to S$155.9m for the previous financial year.
Net profit for the Group rose 10.9% to S$165.0m. Excluding one-off items such as the benefits from the Jobs Credit Scheme, amortisation of deferred gain on intellectual property rights, one-off items relating to the winding up of an associated company and the impact from the reduction in corporate tax rate last year, the Group’s underlying net profit rose 0.3%.
Major investments laying a foundation for the future
Ng Hin Lee, deputy group CEO of SingPost, said: “During the year, we made two major investments – the acquisition of Quantium Solutions and a 30% equity stake in Postea, Inc. We will extend Quantium Solutions’ business beyond cross-border mail and expand our core competencies into the regional markets. Our partnership with Postea, a technology company at the forefront of innovative solutions for the postal and logistics industry, adds value to our business. While much focus is on growing the business, we are also maintaining our competitiveness by strengthening efficiencies and leveraging synergies.”
Optimising resources to enhance efficiency
A delivery base network optimisation exercise was conducted in the year, with the network rationalised from 8 to 7. The Group also set up a centralised gateway operations unit at the Air Transit Centre to handle all mail, express mail and parcel trans-shipments that transit via SingPost, increasing its competitiveness as a regional distribution hub.
Another initiative to streamline operations and optimise resources is the 5-day mail collection and delivery service which will take effect on 15 May 2010. This initiative, which came about due to the declining public mail volumes, and in particular a 40% reduction of mail on Saturdays, as well as changing lifestyles and business environment, will bring about savings which will be passed back to customers via discounts on stamp booklets/sheets and rebates on franked mail for a period of a year.
Actively seeking growth and expansion opportunities
Ng said: “While the economy is picking up and growth forecasts are positive, we maintain a cautiously optimistic outlook, given the challenges facing the postal industry as a whole. To build a more balanced revenue and earnings profile, we are looking to further increase contributions from markets outside Singapore, in particular in Asia Pacific, and to expand our non-mail businesses.”
“We are actively seeking new growth opportunities and will explore acquisition opportunities as and when they arise. As part of our growth strategy, we have been actively exploring investment and business opportunities in Singapore and the region. With our strong cash position and the recent S$200m Fixed Rate Notes issuance, we have the financial capability to fund new investments that may arise.”
1 S$ = 0.73 US$/0.48 GBP (XE.com, 30 April 2010)
