SINGAPORE (May 8): In the war of Covid-19, there are only a few winners. Singapore Post (SingPost) appears to be one of them.
The group booked earnings of $7.2 million for 4QFY2019-20, a reversal from losses of $75.1 million last year.
This lifted its full-year earnings to $91.1 million, nearly quadruple that of earnings of $19.0 million last year. For the quarter under review, the improved bottom line figures come on the back of absence of impairment charges for its US businesses incurred in the previous year including Jagged Peak and TradeGlobal - both of which have filed for voluntary petitions for relief under the bankruptcy code of the US.
Revenue for the quarter decreased by 2.7% to $312.2 million from $320.7 million. This was due primarily to a 5.7% decline in the group’s post and parcel segment, but was partially mitigated by growth in the logistics sector.
SingPost’s operating expenses fell 0.8% to $288.8 million from $291.2 million. Volume-related expenses, which is also the group’s largest cost component, rose 3.5% to $5.9 million. This was driven substantially by higher conveyance costs as a result of Covid-19 impact, as well as higher terminal dues for the international business.
Correspondingly, profit from operating activities tumbled 30.6%.
While the group acknowledges the need to ‘adopt a prudent approach in managing cash flows’, it has proposed a final dividend of 1.2 cents per ordinary share, down from the final dividend of 2.0 cents last year. This brings the group’s total dividend for the financial year to 2.7 cents per share, representing a payout ratio of 60% of underlying net profit.
While SingPost continues to grapple with headwinds in its postal business amid declining letter mail volumes, it notes that there are also opportunities arising from the strong growth of e-commerce logistics, especially in Asia Pacific.
“There are opportunities for the group to strengthen its inorganic growth strategy, and these are opportunities for us that might never have presented themselves if not for the Covid-19 pandemic,” says SingPost’s chief financial officer Richard Lai.
One such opportunity that the group has identified includes the delivery of healthcare products to the larger community and the group has reportedly quickly ramped up its capabilities to deliver medications to chronic patients amid the ‘circuit breaker’ measures.
As at 11.03am, shares in SingPost are trading at flat at 74 cents.
