SingPost Group today reported revenue growth of 9.1% in its second quarter to 30 September,rising to S$153.7 million (€97 million) as a result of growth in all business segments, with the
company claiming that its new businesses and partnerships “were starting to show results”.In spite of a 3.1% decline in domestic mail volume, Mail revenue was up 12.5% to S$105.5million, boosted mainly by a full quarter consolidation of SingPost’s new subsidiary, NovationSolutions as well as by growth in non-traffic activities such as mailroom management and growth ine-commerce packages – reflected in the increased international mail volumes. Excluding NovationSolutions, Mail revenue was S$ 99.2 million, an increase of 5.7%.
Logistics revenue rose 4.2% to S$55.3 million as e-fulfilment activities in Singapore and theregion drove growth in its Quantium Solutions and Speedpost businesses. The company said it wascontinuing to invest to transform Quantium Solutions into a regional e-fulfilment operation.
In Retail, revenue increased 5% to S$17.9 million, with continued growth in financial services,as well as its online store Clout Shoppe. Rental and property-related income declined by 7.0% toS$10.3 million.
However, total expenses soared by 13.6% to S$127 million, attributable mainly to cost pressuresfrom operations, inflation and the group’s continued investments in capabilities and resources todrive its diversification and regionalisation efforts as well as productivity. Wage inflation andgeneral inflation in Singapore are currently running at 4%-5%.
The group’s net profit rose 7.3% to S$32.9 million, although excluding one-off items, underlyingnet profit was S$32.7 million, comparable to the same quarter last year.
Wolfgang Baier, group CEO observed: “In spite of the tough operating environment, including anuncertain economy, we managed to improve group revenue and net profit. But a deep dive shows thatour core business is under tremendous pressure – mail volumes continued to decline, a trend thathas persisted in the past few quarters, with public mail volume registering a steep 10.2% drop inQ2.
“The decline however, has been offset by the growth in international e-commerce volumes as wellas contribution from the recently acquired Novation Solutions. Our transformation into new businessareas such as regional logistics (Quantium Solutions) and financial services is starting to showresults.”
He added: “The pace of growth in costs is, however, outstripping the pace of revenue growth, dueto inflation and other operating cost pressures. We have put in place many measures to mitigate therising operating costs and we continue our investments into infrastructure and process redesigns toincrease productivity. At the same time our investments into growth will continue.”
Baier said SingPost faced a challenging situation, characterised by persistent mail volumedeclines, new competition, an uncertain global economy, and inflationary cost pressures such aslabour costs. “And in the backdrop, the mail mix is changing, with a burgeoning growth ine-commerce items entering the postal network,” he said. “We certainly have to look beyond today’sdemand and take proactive measures to respond to the emerging trends and changing demands of ourcustomers – both individual and corporate customers.
“SingPost will continue to accelerate investment and innovation to upgrade Singapore’s deliverybackbone, to ensure Singapore businesses and consumers have modern delivery options and can benefitfrom the growing digital economy not only within Singapore but also from and to Singapore and inthe region. All over the world, mail profile is shifting significantly from letter-mail topackages/parcels. SingPost needs to be able to meet the surging demand for parcel services over thenext few years. We want to ensure that we can continue to fulfill and even exceed our serviceobligations as Singapore’s Public Postal Licensee and to stay relevant to our customers.”
SingPost began modernising its postal infrastructure with the installation of a multi-purposesorting machine in November 2011, which not only increased productivity but also resulted in bettercustomer service. It has also introduced modern technology such as its ‘ezy2ship’ service forimproving booking processes and better track and trace facilities for its operations, alsoimproving both productivity and customer service.
Just last month SingPost announced that it would also roll out ‘smart parcel stations’ in early2013 on a pilot basis, and recently launched its ‘post-a-card’ mobile app that enables the customerto send physical postcards through their smartphone to almost anywhere in the world. SingPost saidit was also rolling out “a slew of other mobile applications and digital solutions to stay relevantto its customers”, and in the next few years, will invest between S$50 and S$70 million oninfrastructure, processes, technology and people.
