Singapore Post (SingPost) S08 has reported a group operating profit of $33.9 million for the 3QFY2022/2023 ended Dec 31, 2022, 9.7% lower than the group operating profit of $37.5 million in the corresponding period the year before.
According to SingPost, the third quarter is regarded as the seasonal peak for its businesses across various markets.
Group revenue for the quarter grew by 13.4% y-o-y to $495.1 million due to the growth in logistics revenue, which was mainly attributable to Freight Management Holdings (FMH) in Australia. FMH’s business-to-business (B2B) business remained “strong” with increasing volumes from customers and the acquisition of new customers. The growth seen in FMH offset impact from the e-commerce pullback in CouriersPlease’s B2C last-mile delivery business. Famous Holdings, the freight forwarding business saw lower revenue in tandem with the lower sea freight rates.
During the quarter, the growth in logistics revenue offset the decline in the group’s post & parcel contributions as cross-border e-commerce logistics volumes and domestic volumes showed a decline amid a slower e-commerce retail market. That said, the greater air capacity that has come onstream has lowered the high conveyance costs faced by the international post & parcel (IPP) segment, which helped to improve margins and stabilise the segment’s performance since the 1QFY2022/2023.
Property revenue fell y-o-y, largely due to the deconsolidation of General Storage Company which was divested in December 2021.
Group operating expenses increased by 15.3% y-o-y to $460.8 million mainly due to higher volume-related and labour-related expenses from the consolidation of FMH.
As at Dec 31, 2022, the number of consignments in SingPost’s Australia business fell by 1.7% y-o-y to 8.6 million. The number of outbound e-commerce under the IPP segment fell by 9.9% y-o-y to 2.7 million kg. In Singapore, e-commerce logistics under the domestic parcel & post (DPP) segment fell by 47.8% y-o-y to 7.9 million items while letters & printed papers under the DPP segment fell by 5.5% y-o-y to 102.1 million items.
SingPost Centre’s total occupancy stood at 98.8% as at end-December, 2.1 percentage points higher q-o-q.
As at Dec 31, 2022, cash and cash equivalents stood at $460.0 million with the group being in a net debt position of $15.4 million.
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Looking ahead, SingPost expects the operating environment for the year to remain “challenging” due to the weak global economic outlook.
“E-commerce volumes across our markets have since pulled back with the normalising of shopping to offline channels and weaker consumer spending. In the IPP business, while air conveyance costs are trending downwards with greater air capacity, cross-border e-commerce volumes continue to be weak. Sea freight rates are also declining and will have an impact on Famous’ freight forwarding revenue,” says the group in its Feb 21 statement.
“We continue to explore opportunities to divest non-core assets and redeploy capital into transformation initiatives for growth,” it adds.
Shares in SingPost closed at 54.5 cents on Feb 20.
