Singapore Post is cautiously optimistic about the outlook for this year after generating healthyresults in the third quarter ending 31 December 2009.
For the third quarter, the group’s net profit grew 20.6% to S$44.1 million (€22.5 million)while its underlying net profit rose 6.3% to S$38.9 million (€19.8 million).
SingPost’s group revenue grew 12.7% to S$139.6 million (€71.1 million) in the third quarter,boosted by inclusion of revenue from Quantium Solutions (formerly known as G3 Worldwide Aspac groupof companies). Group revenue would have registered a marginal decline of 0.6% without theconsolidation of Quantium Solutions, on a comparable basis with the same quarter last year whenQuantium Solutions was a joint venture.
Mail revenue declined by 1.2% to S$94.4 million as a result of lower domestic mail andphilatelic contributions. In Retail, revenue improved by 4.1% to S$16.9 million on the back ofhigher contributions from financial services. Higher rentals from Singapore Post Centre and theleasing of space at the repurposed post office buildings contributed to a 22.2% increase in rentaland property-related income at S$10.2 million.
Logistics revenue, which includes revenue from Quantium Solutions, grew 166% to S$49.2million. Without the consolidation of revenue from Quantium Solutions, Logistics revenue showed adecline compared to the same quarter of last year.
Total expenses for the Group increased 12.2% to S$100.2 million, due mainly to additionalcosts with the consolidation of Quantium Solutions. Excluding Quantium Solutions, total expenseswould have declined 2.4%. As a result of the Group’s larger staff base, labour and related expensesincreased, offsetting the benefits from the Jobs Credit Scheme. Volume-related expenses rose ashigher costs of sales offset the decline in traffic expenses.
SingPost noted that Singapore has been reclassified by the Universal Postal Union as a NewTarget Country from the category of Developing Country effective 1 January 2010. As a result, itsoperating costs have risen due to the increase in its net terminal dues payments for internationalmailing. Terminal dues refer to settlements for the processing and delivery of international mailbetween countries. The annualised impact is estimated to be around 5% of underlying net profit, andthe group is taking active measures to mitigate the effect of this change.
Ng Hin Lee, Deputy Group Chief Executive Officer of SingPost, commented: “In tandem with theturnaround in the economy and with the benefits of the government’s relief measures, we have seensome recovery in the operating performance of the business. This, coupled with the consolidation ofour regional outfit, Quantium Solutions, enabled us to achieve a healthy set of results.”
Looking ahead, he added: “We are cautiously optimistic about the business outlook, given themodest recovery expected in the global economy. However, SingPost continues to face variouschallenges including e-substitution, margin pressures and increased competition. In addition tothese existing challenges, our operating costs have scaled up quite significantly due to the changein the terminal dues structure.”
Ng stressed: “It is imperative that we continue to be disciplined in reviewing our operationsto improve efficiency and productivity even as we stay vigilant on costs. On the revenue front, wewill focus on optimising our resources such as our retail network, to achieve better yields.”
SingPost said it will maintain its focus on expanding Quantium Solutions’ business beyondcross-border mail and extending its core competencies in Asia Pacific. It remains alert to newgrowth opportunities and will explore acquisition opportunities as and when they arise.
