SingPost looks to ecommerce bounty as mail drags down profits
A slower economy has hit profits at Singapore Post during the first quarter of the financial year, although according to its latest results some balance was provided by strong growth from e-commerce shipping. SingPost today reported a 3.5% drop in its profits to S$39.2m for the quarter.
Revenues grew overall by 3% to S$142.3m, but the Post’s operating costs grew faster, by 6% year-on-year to S$109.3m.
The company said it was facing a challenging outloook at the moment, but was investing in building its presence in the South-East Asia region to allow a more balanced source of revenues.
Among market sectors, slow growth was seen in the mail segment, where revenues grew 1.6% year-on-year to S$97.2m thanks to contributions from government, business and direct mail.
Retail revenue grew at a similar rate, 1.5%, to S$16.6m for the quarter, with the sale of products offsetting decline in financial services income after SingPost sold off its SpeedCash business in March 2011.
However, SingPost saw strong growth in its Logistics division – revenues grew 10.7% to S$51.2m thanks to good performances in the company’s cross-border mail and logistics business Quantium Solutions, express delivery unit Speedpost and online payment and shipping unit vPOST.
Commenting on the results, Ng Hin Lee, the chief executive for postal and corporate services, said: “In spite of the slower economy in the first quarter, the Group’s topline grew 3% with all business segments showing improvements in revenue.
“Logistics recorded strong revenue growth mainly from Quantium Solutions which saw good traction from regional e-fulfilment business and transhipment. Operating conditions remained challenging but overall, we maintained
underlying net profit at a stable level of S$37.4 million.”
Investments
SingPost has been investing to build on the good growth in its Logistics unit, with a particular eye on e-commerce logistics, with a larger stake in the Malaysian express specialist GD Express Carrier Berhad, as well as Chinese firm Shenzhen 4PX Express Co. Last month, the company also announced pans to acquire a 30% stake in Vietnamese logistics firm Indo Trans Logistics Corporation.
Aiming to help accelerate the boom in e-commerce, SingPost bought a 95% stake of internet retailer Clout Shoppe in February, which it aims to grow throughout the region.
And, SingPost has been expanding its electronic postal business in the region by buying up the remaining 30% stake in hybrid mail business DataPost, and by taking a 20.12% stake in Malaysian document processing business Efficient E-Solutions Berhad.
Dr Wolfgang Baier, chief executive of SingPost’s international division, said diversifying and building up the company’s regional presence would help counter the economic challenges to the group and provide a more balanced revenue and earnings profile.
He said: “The regional investments strengthen our network and enable us to gain entry into developing markets with growth potential such as China, IndoChina and India.
“We are working on leveraging these regional assets as well as our existing regional subsidiary Quantium Solutions to further harness growth opportunities, making the necessary investments in people, infrastructure, technology and processes.”
Dr Baier said SingPost would continue to explore opportunities for further acquisitions in the Asia-Pacific to create long-term value for the company and its shareholders.
