Singapore Post saw profits fall back in the fourth quarter ending March 31, 2012, and 2011-12 asa whole amid tough trading conditions but is stressing its determination to transform and diversify
its business further.In the January-March 2012 quarter, the postal group increased revenues by 3.1% to S$146 million(€89 million), driven by logistics and retail services, but net profit was down 17.4% to S$30.6million (€18.7 million) as costs increased by 14%, partly due to investments.
For the full April 2011 to March 2012 year, SingPost’s revenues increased by 2.2% to S$579million (€354 million) but costs rose by 7.8%. As a result, net profit dropped 11.8% to S$142million (€87 million).
Mail, the profitable core business, had steady Q4 revenues of S$96.4 million, as growth ininternational mail and philatelic revenue offset the decline in domestic mail and hybrid mailcontributions. Mail revenue was also flat at S$385.4 million over the full year.
Logistics revenue grew 8.2% to S$54 million in the fourth quarter on the back of higherSpeedpost contributions and increased e-fulfilment activities in Quantium Solutions and vPOSTshipping business. Over the full year, Logistics revenue grew 8.6% to S$215.3 million, attributedto the increase in e-fulfilment activities. Higher contributions were recorded from Speedpost,Quantium Solutions, transhipment and vPOST shipping businesses.
Retail revenue rose 9.2% to S$18.2 million in Q4 as increased contributions from financialservices, retail products and online store Clout Shoppe offset the drop in agency services. Retailrevenue rose 3.8% to S$69.4 million in the year ending March 2012.
Commenting on the Q4 performance, Dr Wolfgang Baier, SingPost’s Group Chief Executive Officersaid: “Revenue growth was offset by the generally weaker business environment as well asinflationary cost pressures. We saw a slowdown in Mail revenue in the domestic segment and inLogistics’ cross-border mail business under our subsidiary Quantium Solutions. In spite of that,our Logistics and Retail & Financial Services managed to grow through contributions fromnon-traditional revenue streams such as e-fulfilment, e-commerce and financial services. Wecontinue to step up our investments to build a sustainable future for SingPost.”
Reviewing the year as a whole, he added: “The postal landscape remained difficult during theyear with e-substitution continuing to take its toll on our business. The unfavourable businessenvironment – a slower economy, inflation and cost pressures from a tight labour market – furtherexacerbated the situation. However, we saw opportunity for growth in e-commerce, e-fulfilment andregional logistics. The rise in e-commerce activities locally and in Asia has been promising and totap this growing market, we have to respond fast and step up our investments to be ready for thefuture. ”
SingPost stressed that in response to these challenges it rolled out its acceleratedtransformation programme last year, which is built on five key business pillars: Mail, DigitalServices, Logistics, e-Commerce and Retail & Financial Services.
Dr Baier said: “For SingPost, FY2011/12 can be characterised as the watershed year in ourtransformation journey as we made significant investments to capitalise on the opportunity to buildour business. During the year, we invested in capabilities and resources in areas such as people,IT and operations and the results – revenue growth in our non-postal business namely Logistics andRetail, in spite of the challenging conditions – show that we are on the right track.”
SingPost’s transformation programme, Ready for the Future, comprises 20 corporate-wideinitiatives and projects to drive growth organically and inorganically, both in the domestic andregional markets. These initiatives include cost management and productivity projects as well asgrowth projects.
For Mail, the focus is on innovation and productivity to stay relevant in the face of changingdemands and to keep operations efficient. During the year, SingPost developed new services to caterto the growth in e-commerce packets, e.g. ePAC, a service collaboration with eBay and USPS. Othernew services in the pipeline include SMS confirmation for letterbox delivery and post-a-card, amobile application that converts the sender’s selected photo into a physical postcard and deliveredto anywhere in the world.
In Digital Services, SingPost has been developing its own digital mailbox, vBOX, to providecustomers with an alternative or supplementary communication platform. SingPost is expanding itsdigital services into the region through its wholly-owned subsidiary DataPost which providesbusiness process outsourcing (BPO) services ranging from secured printing to letter-shopping todelivery to document management as well as mailroom management. During the year, SingPost made astrategic investment in Efficient E-Solutions and announced that it was in the process of acquiringNovation Solutions in Hong Kong through DataPost, to further grow its BPO services.
Under Logistics, the Group is focused on strengthening its regional e-fulfilment network byleveraging Quantium Solutions as well as its regional associates namely GD Express in Malaysia,Indo Trans Logistics Corporation in Vietnam and Shenzhen 4PX Express in China. During the year, theGroup invested significantly in building capabilities in the areas of people, technology andoperations as it transforms Quantium Solutions from a cross-border mail service provider to a totallogistics solutions and e-fulfilment provider with many new regional customers coming onboard.
For e-Commerce, the Group is extending its presence in the online retail space with its luxurystore Clout Shoppe and its shipping and shopping portal, vPOST. Service offerings have beenextended to fast-growing regional markets such as China and India through partnership and strategicacquisitions. The Group also introduced enabling services such as EZsuite, an online portal, toserve the SME market venturing into e-commerce.
In Retail & Financial Services, the focus is on innovation and productivity. New serviceswere introduced during the year including transactional banking services and additional governmentservices. The Group is looking to expand its distribution channels with mobile application servicesand more self-help services and is also reaching out to SMEs.
SingPost added that it has been investing considerably in productivity throughout the years,from deploying automation to adapting operations and processes to leveraging technology.
Dr Baier: “Clearly, as the Group transforms to stay relevant, we have to invest even more intoproductivity and innovation.” Among others, the Group is introducing a web-based booking tool whichwill not only improve productivity and efficiency, but will also enhance customer experience. It isalso exploring an island-wide automated delivery and collection system and other new technologiesto meet changing customer needs.
To finance new investments as part of its growth strategy, the Group raised S$350 million fromthe issue of Senior Perpetual Cumulative Securities in March 2012. It will also use the proceeds tofund anticipated capital expenditure and working capital requirements.
However, Dr Baier reiterated that the Singapore market remains an important one for SingPost: “Singapore contributes more than 80% of total revenue and is an important market for us. We arecommitted to our social obligations and quality of service standards, and are continually investingin process improvements, additional resources as well as product and service innovations to serveour domestic customers.”
Rounding up, he stressed: “It is no longer an option for us to conduct business as usual. We areredefining and transforming our business at an accelerated pace to stay relevant. This needsinvestments and time. Shareholders can be assured that we are committed to not only protectingtheir interests but to also enhancing value in the longer term. We are investing now to be readyfor the future.”
