Singapore Post (SingPost) S08 has reported a group operating profit of $11.9 million for the 1QFY2023/2024 ended June 30, 11.8% higher than the group operating profit of $10.6 million.
The higher profit, which also includes the impact of the depreciation of the Australian dollar (AUD) and Chinese renminbi (RMB), was due to the group’s Australia business along with the continued recovery in the international parcel and post’s (IPP) cross-border e-commerce logistics business. The gains were mitigated by the declines in the freight-forwarding and domestic postal businesses.
On a constant currency basis, the group’s operating performance for its Australia and IPP business would have seen operating profit up by 40% y-o-y.
Group revenue fell by 15% y-o-y to $404.1 million due to the lower revenues in the IPP and domestic post & parcel (DPP) businesses as well as Famous Holdings. This was mitigated by the higher revenue from SingPost’s Australia business.
The IPP business saw revenue fall on a y-o-y basis due to the lower RMB although profitability and margins improved “significantly” as conveyance costs continued to fall. As a result, the IPP business reversed into profitability from the loss in the same period the year before.
DPP’s revenue fell as volumes of letters & printed papers and e-commerce deliveries continued to decline down by 5.3% y-o-y, although volumes from new customer acquisitions helped to mitigate the normalisation of e-commerce volumes in the market after the pandemic.
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The group notes that the domestic postal business has been undergoing a “structural decline” and continued to report an operating loss in the 1QFY2023/2024 due to high operating overheads, particularly in its post office network. That said, it “remains focused on driving e-commerce volumes onto the delivery network and continues to manage costs prudently”.
"The structural decline in postal services continued to impact revenue and profitability. The commercial viability of the domestic postal service is currently being addressed and the group is seeking approval from Infocomm Media Development Authority (IMDA) for postage rate increases in the immediate term to reflect the true cost of the letter mail business,” says SingPost.
The group, on July 6, said that it will work with the IMDA to review its costs and operating model in a bid to ensure long-term sustainability of the domestic postal service.
SingPost’s operating profit from its property business stood “relatively stable” as overall occupancy at SingPost Centre remained unchanged at 98.2% q-o-q.
As at June 30, cash and cash equivalents stood at $483.3 million.
As at 9.23am, shares in SingPost are trading 1 cent higher or 2.06% up at 49.5 cents.
