Singapore Post is accelerating efforts to compensate for the decline in its high-margin domesticmail business, including expanding its international and e-fulfilment activities, as it reported a
slide in profits in the first quarter to 30 June.Despite a 6.5% increase in revenue to S$151.6 million, as growth in revenue outside of domesticmail was able to offset the decline in domestic mail contributions, net profit declined 2.9% toS$38.1 million in the first quarter, as the group “continued to invest in resources for futuregrowth and came under the pressure of the declining high-margin domestic mail business”.
Excluding one-off items, underlying net profit was S$36.6 million, a decrease of 2.2% from thesame quarter last year. Total expenses increased 8.8% to S$118.9 million.
Overall mail revenue increased 3.7% to S$100.9 million, as growth in international mail andfirst-time consolidation of the recently acquired Novation Solutions offset the decline in domesticmail contributions.
Logistics revenue continued to grow, thanks to the group’s e-fulfilment focus in Singapore andthe region. Revenue was up 11.5% to S$57.1 million, on the back of higher contributions from thee-fulfilment activities of its Quantium Solutions and Speedpost businesses.
In the company’s Retail unit, revenue increased 12.4% to S$18.6 million, with continued growthin financial services and the online store Clout Shoppe.
Wolfgang Baier, SingPost’s group CEO, commented: “We continued to face a challenging operatingenvironment as Singapore’s economy contracted 1.1% during the period April to June, and global andregional markets remained uncertain. Domestic mail performance is worsening. In spite of theeconomic and industry challenges, the group managed to grow its topline by 6.5% in the firstquarter of FY2012/13, as business segments registered improved revenue performances.”
He said SingPost’s accelerated transformation programme, Ready for the Future, had gainedmomentum as the businesses pushed for growth organically and inorganically. New initiatives rolledout during the first quarter included: an e-fulfilment push for the group’s international mail,Quantium Solutions, and logistics businesses; the company’s ‘SMS mail service’, which provides atrack-and-trace feature as well as SMS notification for normal mail delivered to the letterbox;Post-a-card, a mobile application that converts the sender’s selected photo into a physicalpostcard, delivered to anywhere in the world; the acquisition of new local and regional e-commercecustomers, boosting the logistics business; and the completion in May 2012 of the group’sacquisition of Novation Solutions in Hong Kong, as part of its digital services strategy.
Baier added: “As part of our transformation programme, we will continue to invest into people,technology and operations as we scale up our businesses, not just in Singapore but in the region.For instance, we are investing in building our regional capabilities as we acquire more regionalcustomers and expand Quantium Solutions’ business.”
He said the group’s overseas contribution was growing and now accounted for more than 15% ofrevenue, up from 12% in the same period last year. At the same time, costs grew in tandem with theexpansion of the group’s business activities.
On the business outlook, Baier said: “While the outlook remains challenging, we are committed toour efforts to transform the business to build a sustainable future for SingPost and for ourshareholders. Our transformation programme is gaining good traction in new business areas such ase-fulfilment.
“We are really excited with the opportunities in e-commerce and m-commerce, and will beexpanding our distribution channels with mobile applications and more self-help services. We arealso looking to reach out to SMEs going forward. With the decline in high-margin domestic mail, wehave to move even faster to offset the impact on profitability.”
Besides growth initiatives, the transformation programme also included productivity and costmeasures as well as a focus on continued service excellence in the domestic market, he pointed out. The group continues to explore new technologies and resources to further enhance productivity andservice to its customers.
“One such initiative is ezy2ship, a self-help web-booking tool which will be rolled out in thenext few months,” the company observed. “SingPost is also exploring the deployment of parcel lockerstations, which will boost customer service without increasing manpower costs. These parcel lockerstations provide customers the flexibility and convenience to drop off and pick up their parcelsround-the-clock.”
