SingPost H1 profit rises 13.3% to S$35m on growth in domestic businesses
SINGAPORE Post's (SingPost) net profit for the first half of the fiscal year ended September 2021 was up 13.3 per cent to S$35 million from S$30.9 million in the corresponding year-ago period.
Earnings per share rose to 1.23 Singapore cents from 1.04 cents a year ago.
In a bourse filing on Wednesday (Nov 3), the group attributed the rise to growth in the domestic post and parcel, logistics and property segments. The overall growth happened despite an offset by a reduction in the international post and parcel segment due to Covid-19-related disruptions, the group added.
The rise in net profit is in line with the growth of revenue to S$731.4 million from S$707.8 million, and the 28.4 per cent rise in operating profit to S$51.1 million from S$39.8 million.
However, the group reported an increase of 1.8 per cent for its operating expenses to S$682.6 million from S$670.4 million, as well as increases across most of its expenses categories. In particular, finance expenses increased 39.8 per cent to S$7.1 million from S$5.1 million, due to higher interest expense and borrowing costs, SingPost noted.
Rise in volume-related costs by 2.4 per cent to S$439.4 million from S$429.2 million was driven by higher freight-forwarding and e-commerce logistics volume.
Segmentally, revenue from SingPost's logistics segment rose 29.6 per cent to S$379.5 million from S$292.7 million. The logistics segment delivered an operating profit of S$16.2 million, up from S$5.7 million previously.
The company noted that within the segment, its Australian last-mile parcel delivery unit CouriersPlease and freight-forwarding arm, Famous Holdings, experienced robust growth in the six months ending Sep 3. In particular, Famous Holdings saw 63.3 per cent revenue growth in the period due to higher sea freight volumes and rates.
The company had also previously announced in October that it would increase its stake in Australia logistics service company, Freight Management Holdings (FMH), from 28 per cent to 51 per cent.
"With the investment in FMH and SingPost Group's enhanced capabilities in Australia, we will have a stronger platform to drive revenue and earnings growth, and this will enable us to further our strategic ambition of creating a second home market over the long term," a company spokesperson said, adding that it will continue to explore opportunities to expand its business and capabilities in Australia.
In the property segment, which comprises commercial property, rental and self-storage business, revenue improved by 7.9 per cent to S$59.8 million from S$55.4 million. This is largely due to lower rental rebates provided for eligible tenants, as well as higher receipts from car park and other charges, said SingPost. Operating profit in the property segment increased 13.5 per cent to S$26.6 million, from S$23.5 million.
Revenue from the post and parcel business saw a decline of 17.5 per cent to S$325.5 million from S$394.8 million, and operating profit declined to S$11.3 million from S$23.9 million, owing to the absence of government grants in this period, compared to last year.
Revenue in the international post and parcel segment declined by 27 per cent year on year from the high base last year, when there was a surge in shipment volumes out of China.
However, the domestic post and parcel business saw e-commerce delivery revenue growth of 32 per cent in H1 ending September 2021, which was able to offset the continued double-digit mail revenue decline, the group noted.
In the face of global supply-chain disruptions, the company has also rationalised volumes based on individual trade lane economics to balance business preservation and loss avoidance.
"We have also optimised our route and partner selection to minimise costs, leading to improvement in underlying margins," the spokesperson said.
The group has declared an interim dividend of 0.5 Singapore cent per ordinary share, similar to the amount in the year-ago period. The dividend is expected to be paid out on Nov 30.
SingPost also announced the promotions of Neo Su Yin and Ryan Tang as chief executive officers of the Singapore and international businesses respectively.
Group chief executive officer Vincent Phang said: "We are accelerating our growth plans for our e-commerce logistics business, as demonstrated by our reaching an agreement to bring forward the plan to increase our shareholding in Freight Management Holdings in Australia from 28 per cent to 51 per cent."
He highlighted that SingPost will press on with the transformation to position itself as a global e-commerce player while carefully managing expenses, cash flow and liquidity.
"We continue to review our business portfolio, to determine if there are opportunities to divest non-strategic assets and redeploy capital towards strategic initiatives that support long-term growth," Phang added.
Shares of SingPost closed 0.8 per cent or S$0.005 lower at S$0.660 on Nov 2.
