SingPost's investments in logistics and e-commerce bearing fruit
Singapore
SINGAPORE Post's aggressive push into the logistics and e-commerce space appears to be paying off as the group registered increased earnings despite weakening contributions from its traditional mailing business.
In Q3 FY15, for the three months ended Dec 31, 2014, the courier service provider registered a net profit of S$42.23 million, 7.3 per cent higher than the corresponding period in the previous year.
Over the same period, revenue increased by 7.6 per cent to S$239.62 million, as improved contributions from its e-commerce and logistics businesses offset the decline in mail revenue.
In the latest quarter, revenue contributions from its mailing business fell 2.3 per cent to S$130.11 million while the group's logistics turnover surged 20.7 per cent to S$122.06 million and its retail & e-commerce revenue inched up 1.3 per cent to S$22.88 million.
Revenue in the mail segment fell as a result of lower contributions from domestic mail and international mail, SingPost said on Wednesday.
Meanwhile, logistics was the group's bright spot this quarter.
The company's logistics revenue grew with added contributions from Quantium Solutions, its wholly-owned regional logistics subsidiary, and Singapore Parcels.
Freight forwarding revenue from Famous Holdings increased with the addition of new subsidiaries. Famous Holdings is a Singapore-based freight consolidator and freight-forwarder with offices in Singapore, Japan, Australia, China, Malaysia and the US.
Revenue from General Storage's self-storage business, too, improved with additional facilities and the inclusion of a new subsidiary, The Store House (Hong Kong). SingPost had acquired a full stake in the Singapore-based self-storage business in January 2013.
In the retail & e-commerce space, revenue was higher as growth in e-commerce services offset the decline in traditional retail & agency services and financial services.
On a less positive note, SingPost's rental and property income fell 3.9 per cent to S$10.9 million, largely due to lower rental income from the Singapore Post Centre. SingPost said that it intends to redevelop the retail mall at Singapore Post Centre and has appointed consultants to advise the company on such redevelopment.
Total Q3 expenses hiked 8 per cent to S$199.1 million with the inclusion of its new subsidiaries, and as the company continued to invest in new initiatives and service quality improvements.
In December 2014, for about A$95 million (S$118.78 million), Quantium Solutions acquired the full interest in Couriers Please Holdings, an Australian metropolitan express parcel delivery service. "The acquisition will allow the group to roll out end-to-end solutions across e-commerce, forwarding, warehousing and delivery in Australia," SingPost said in a statement.
Across several years, the group has also recently committed over S$100 million in technology, manpower and capabilities to improve to drive productivity and enhance its service levels, SingPost's assistant vice-president of group communications, Patsie Tan, wrote in a statement last month.
For the nine months ended Dec 31, 2014, SingPost's net profit grew 6 per cent to S$119.07 million while revenue increased 6.9 per cent to S$670.87 million.
SingPost said that the group continues to explore investment opportunities in Asia Pacific as part of its growth strategy. It has also been expanding its end-to-end e-commerce logistics solutions network in the region and investing in e-commerce logistics infrastructure, technology and capabilities.
Last month, its subsidiary, Famous Holdings, acquired Famous Pacific Shipping, a New Zealand-based freight forwarder, thus broadening its freight network and establishing an entry point into the New Zealand freight market.
Chinese e-commerce group, Alibaba Group, is also a significant shareholder of SingPost. Both companies are exploring the idea of a joint venture to grow their international e-commerce logistics businesses, Singapore's Economic Development Board reported in June last year.
For Q3 FY15, SingPost's earnings per share stood at 1.794 Singapore cents while its net asset value per share was 48.50 cents.
The group also declared an interim dividend of 1.25 Singapore cents per share for the quarter, unchanged from the same period last year.
On Wednesday, SingPost shares closed trading down 0.49 per cent at S$2.03.
