E-commerce dominates SingPost's top line, contributes 65%

MAINBOARD-LISTED postal service provider Singapore Post (SingPost) reported an e-commerce-dominated top line, with 65 per cent derived from the business.

The increase in e-commerce revenue has outstripped the decline in contribution from letters and printed papers, it said, adding that e-commerce accounted for 34 per cent of its domestic post and parcel revenue for the financial year to March, up from 21 per cent in the previous year.

Vincent Phang, chief executive for postal services and Singapore, told The Business Times during a media briefing on Thursday that SingPost has an advantage over its e-commerce service competitors with its international and domestic postal network and structure.

Although the pandemic has given a boost to its e-commerce top line, higher costs were incurred for health and safety arrangements.

SingPost has high fixed costs being a national postal service provider, and its e-commerce business requires different assets given the different profiles of e-commerce consumers. However, now that e-commerce is contributing a lot more to its top line, SingPost will move a bit more quickly so that the better showing would trickle down to the bottom line.

Despite e-commerce rivals upping their game with some adding aeroplanes to their fleet, Mr Phang said SingPost embraces the competition because the pie is expected to be bigger.

Revenue rose 4.3 per cent to S$696.9 million for the half-year from S$668.1 million a year ago, led by strong e-commerce volume growth in both the logistics as well as domestic post and parcel segments, financial results released pre-trading showed.

Although there was better showing from e-commerce, the national postal service provider's net profit for the half-year more than halved to S$16.7 million; that for the full-year nearly halved to S$47.6 million.

In the post and parcel segment, there was a decline of 10.1 per cent in half-year revenue to S$350.2 million as international post and parcel volumes continued to be impacted by the constraints on air capacity in and out of Changi Airport. Consequently, segmental margins dropped on significantly higher conveyance costs.

However, the increase in e-commerce revenue has more than offset the decline in letters and printed papers revenue.

Revenue in the logistics segment rose 26.6 per cent for the half year to S$325.2 million, as both e-commerce logistics and freight forwarding benefited from the accelerated adoption of e-commerce activities during the pandemic.

The property segment reported a slight 1.6 per cent dip in half-year revenue to S$59.9 million, largely due to lower receipts from the car park and atrium sales for the SingPost Centre mall.

Net asset value stood at 72.17 Singapore cents as at March, marginally higher than the 71.10 cents a year ago.

Its board has proposed a final dividend of 0.6 Singapore cent, lower than the 1.7 cent issued for the same period last year. This would bring the annual dividend for the financial year to 1.1 cent, compared to FY2020's 2.7 cents.

The counter closed 1.32 per cent lower at S$0.745 on Thursday.