SingPost Q2 profit down 12.9% to S$25.1m as one-off item weighs

AN exceptional fair value loss helped to erode results for Singapore Post (SingPost) in its second quarter.

Net profit sank 12.9 per cent to S$25.1 million from the previous year, the group said in a Singapore Exchange filing on Friday morning.

The group recorded an exceptional fair value loss on warrants from an associate company of S$2.9 million compared to an exceptional gain of S$0.9 million last year.

Excluding this, underlying net profit for Q2 would have risen marginally, by 0.4 per cent to S$28.1 million.

SingPost's overall operating profit jumped by 33.5 per cent  to nearly S$40 million, but this was largely offset by a S$3.6 million loss in share of results of associated companies and joint venture in Q2, compared to a profit of $4.9 million last year. This was due to its Chinese associate 4PX incurring higher expenses as it invested in warehousing and infrastructure.

For the three months ended Sept 30, revenue rose 2.2 per cent to S$368.7 million from the previous year. 

Revenue for post and parcel, its largest contributor to turnover, rose 1.6 per cent due to higher international mail revenue from cross-border eCommerce deliveries, offsetting the impact of  lower domestic letter mail volumes. Profit on operating activities for that segment rose 5.1 per cent, thanks to higher margins from domestic last mile eCommerce-related deliveries in Singapore.

"The group is starting to reap operating synergies from the ongoing integration of our last mile delivery capabilities in the post and parcel divisions," the company noted.

Meanwhile, its logistics business reversed a loss in the previous year to post an operating profit on flat revenue, as Quantium Solutions reviewed unfavourable customer contracts to improve profitability. 

However, SingPost's eCommerce segment saw operating losses widen to S$11.2 million in Q2, largely due to its US businesses where pricing pressures led to certain customer contracts being renewed at lower rates.

Operating profit for property rose 54.1 per cent due to rental income from SingPost Centre.

Operating expenses declined 0.4 per cent in Q2, as a result of successful cost management initiatives, said SingPost.

Earnings per share for Q2 shrank to 0.95 Singapore cents from 1.11 Singapore cents in the year-ago period. 

Dividend per share was unchanged at 0.5 Singapore cents.

For the first half-year, net profit fell 27.2 per cent to S$43.9 million from the preceding year. For the six months ended Sept 30, revenue increased 2.8 per cent to S$741.3 million from the preceding year. 

Earnings per share for the half-year fell to 1.61 Singapore cents from 2.32 Singapore cents in the preceding year. 

Paul Coutts, group chief executive officer, said in a statement: "We have shown progress in many parts of our business, including winning in our home market with average daily parcel volumes up 38 per cent from a year ago, as well as improved profitability in the Logistics and Property segments. In the eCommerce segment, we continue to integrate our US businesses for improved efficiency and execution for the coming peak season."