SingPost Q1 operating profit tumbles 60% to S$3.4 million amid falling revenue, margin squeeze

[SINGAPORE] Singapore Post’s (SingPost) group operating profit for the first quarter ended Jun 30 came in at S$3.4 million, a 60 per cent year-on-year drop from S$8.4 million.

The decrease in operating profit comes on the back of increased market pressure and competition, said SingPost in a bourse filing on Friday (Aug 22).

Revenue fell 23.8 per cent to S$162.3 million compared with S$213 million in the year-ago period. The decline was largely attributed to the significant reduction in international deliveries.

Also contributing to the poorer showing was a drop in operating profit margin to a mere 2.1 per cent. Just last month, S&P Global Ratings downgraded SingPost’s long-term issuer credit rating on SingPost to “BBB-” from “BBB”, citing its high fixed operating costs.

Group operating expenses declined 22.7 per cent from S$204.6 million to S$158.2 million following the divestment of its Australia business in March this year.

The company has yet to appoint a new chief executive officer after having fired Vincent Phang last year over the mishandling of a whistleblower complaint.

By segments

Lower delivery volumes meant that the domestic and international delivery business recorded lower revenue, while letter mail volume contracted due to continuing electronic substitution. Domestic and international e-commerce volume also fell.

SingPost and Alibaba agreed to unwind their respective minority cross-shareholdings in Quantium Solutions International (QSI) in April, resulting in the sale of QSI’s 17.6 per cent stake in Shenzhen 4PX to Cainiao.

The group then entered a sale and purchase agreement for the divestment Quantium Solutions in five Asia Pacific countries and territories to Morning Global.

Property leasing revenue, mainly comprising rental income from SingPost Centre, was stable, said the group. It added that the property assets business (including SingPost Centre) is also expected to remain stable.

The counter closed flat at S$0.50 on Thursday.