SINGAPORE Post’s (SingPost) group operating profit for the third quarter ended December was S$21.1 million, down 23.8 per cent on the year from S$27.7 million.
The decrease in operating profit comes as operating expenses for SingPost’s Singapore and International business units outpaced revenue growth.
“The decline was driven primarily by ongoing macroeconomic pressures, including higher inflation, supply chain disruptions and a highly competitive environment,” said SingPost on Thursday (Feb 20).
Group revenue for the quarter rose 12.1 per cent to S$510.6 million, from S$455.4 million previously. The third quarter is a “seasonally high period” for SingPost’s businesses.
SingPost said the improved top line comes as lower contributions from its Singapore and International businesses were outweighed by revenue growth in its Australia segment and property leasing.
Group operating expenses increased by 14.1 per cent to S$490.9 million from S$430.1 million.
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By segments
The overall delivery volumes in the Singapore postal and logistics business grew by 3.4 per cent, as letter mail volume growth offset lower e-commerce volumes due to service performance issues.
But year on year, revenue fell due to lower contributions from logistics, financial and other services.
The lower top line, along with high operating costs, resulted in an operating loss in the Singapore postal and logistics business, compared to a profit in the year-ago period, said SingPost.
Property leasing revenue improved on the year due to higher rental income from SingPost Centre. Overall occupancy rate at the property was 98.2 per cent as at Dec 31, 2024, compared to 96.2 per cent as at Mar 31, 2024.
For SingPost’s International business, revenue fell on the year due to a 29.6 per cent year-on-year decline in volumes.
“The continued contraction in cross border e-commerce volumes and challenging business conditions resulted in an operating loss for the cross-border segment during the quarter,” said the national postal service provider.
Freight forwarding revenue and profit improved on the year due to higher sea freight rates.
SingPost’s Australia business recorded higher revenue and operating profit year on year, mainly due to Freight Management Holdings’ (FMH) consolidation of Border Express, following its acquisition last March.
As at end-December, the group had S$391.5 million in cash and cash equivalents from S$476.7 million as at Mar 31, 2024.
Borrowings rose 4.8 per cent to S$866.9 million as at Dec 31, 2024, from S$827.1 million as at end-March last year. The increase was mainly due to additional bank loans undertaken by FMH for the deferred consideration for Border Express.
Total equity stood at S$1.4 billion as at Dec 31, 2024, down 1.5 per cent from S$1.42 billion as at Mar 31, 2024.
Outlook
SingPost intends to “progressively divest and unlock the value of non-core businesses and assets”.
Following the divestment of the Australia business, SingPost will review its group strategy and reset it in due course.
Last December, SingPost announced that it has entered into a share purchase agreement to dispose of its Australian business at an enterprise value of A$1 billion (S$870 million) as part of the outcome of a strategic review. The buyer is Pacific Equity Partners (PEP), an Australia-headquartered private equity fund.
Even amid the recent sacking of SingPost’s senior executives over their negligence in handling internal probes related to a whistleblower’s report, PEP had told The Business Times previously that the divestment is “on track”.
The three senior executives were former group chief executive Vincent Phang, group chief financial officer Vincent Yik, and the CEO of the company’s international business unit Li Yu.
Phang had also stepped down from his role as SingPost’s non-executive, non-independent director in January.
A slew of appointments had taken place in SingPost since the incident.
Neo Su Yin assumed the group chief operating officer role in January, and was named to take over the role of local operations CEO after Shahrin Abdol Salam resigned.
The national postal service provider also appointed former executives of Singapore Exchange and SIA Engineering as its new non-executive, independent directors.
On Feb 19, the group also said it will lay off 45 employees “in the coming months” in a move to restructure the company. Those affected by the layoffs are primarily in corporate support units, with a “small number” from the international business unit.
SingPost noted that the restructuring is the result of prolonged macroeconomic challenges, such as intense competition. It emphasised that the layoffs are not correlated with previous incidents or whistle-blowing reports.
The group intends to focus on building market share and maximising capacity utilisation, while reviewing its customer service for its Singapore business.
“Adjustments will be made to some post offices and locations to ensure that postal services remain cost-effective and relevant,” said SingPost.
It expects its international business to face increasing challenges amid a “volatile global environment” for e-commerce logistics.
“These challenges, driven by trade disputes, geopolitical conflicts and evolving regulatory requirements, are expected to have a prolonged impact on the International cross-border business,” the group said.
Shares of SingPost were trading 0.9 per cent or S$0.005 higher at S$0.565 as at 10.09 am on Thursday.
