Singapore Post (SingPost) S08 has reported a group operating profit of $27.7 million for the 3QFY2023/2024 ended Dec 31, 2023, 18.2% lower than the group operating profit of $33.9 million recorded in the previous corresponding period.
While all business segments posted positive operating profit in the quarter, with around 86% of group revenue generated internationally, the strong Singdollar continues to have a significant impact on SingPost's consolidated performance. On a constant currency basis, group’s operating profit would have been lower by an estimated 3.9% y-o-y.
Group revenue fell by 8.0% y-o-y to $455.4 million as the freight forwarding segment recorded lower revenue, which declined in tandem with contraction in the industry that has come off pandemic highs.
Significant weakening in sea freight rates and volumes, revenue and profit from SingPost’s Famous Holdings have continued to decline in line with the overall market, although margins have remained constant. Notably, freight forwarding is the only segment reporting significant contraction in both revenue and operating profit.
SingPost’s domestic post and parcel (DPP) business saw revenue increase on the back of the postage adjustment implemented in October 2023 as well as growth in eCommerce volumes, which increased with new customer acquisitions and an increased share of customer volumes.
While the profitability of the delivery business has improved significantly and the domestic segment was profitable in the 3QFY2023/2024, SingPost says its post office network remains unprofitable and is in the process of being reviewed.
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In the international post and parcel (IPP) segment, margins continued to improve through the quarter. Operating profit has grown compared to last year despite the stronger Singdollar and the slowdown in global trade and China exports which has impacted cross-border eCommerce volumes globally.
While the group’s cross-border eCommerce volume has declined, air conveyance costs continued to trend downwards in the quarter and have fallen 30% y-o-y, leading to a significant margin improvement.
In order to create greater “operational synergy” and to offer hybrid postal-commercial solutions to customers, SingPost has integrated the cross-border operations of IPP and Quantium Solutions with its launch of the digital 4PL platform. As a result, the share of commercial revenue in this hybrid model has doubled to 30%, while profitability of the international cross-border business has improved.
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The group’s Australia business has also continued to perform steadily in local currency terms. FMH’s 4PL business continued to grow with new business acquisitions, although the 3PL business is facing headwinds and significant margin compression from higher operating costs in line with the market. CouriersPlease’s last-mile delivery business, however, continued to grow and outpace the industry as it increased delivery volumes with new customer acquisitions.
Meanwhile, SingPost’s property revenue and operating profit from its property business stood “relatively steady” as overall occupancy at SingPost Centre stood at 96.3% as at Dec 31, 2023, compared to 98.2% as at March 31, 2023.
As at end-2023, cash and cash equivalents stood at $437.3 million.
Shares in SingPost closed 0.5 cents lower or 1.22% down at 40.5 cents on Feb 8.
