Singapore Post (SingPost) generated record revenues and net profits in the April – June first quarter of its 2015/16 financial year thanks to strong growth in e-commerce and logistics.
The group’s revenue increased 20.7% to S$254.6 million while operating profit was 14.5% higher at S$57.7 million due to a combination of steady business operating performance overlaid with profit contribution from one-off gains from divestments. Net profit improved by 15.8% to S$46.6 million and the underlying net profit rose 8% to S$40.3 million.
Revenue from Logistics, which also includes SingPost’s eCommerce logistics business operations, grew strongly by 43.6% to S$140.1 million. This growth along with the corresponding 74.6% improvement in operating profit from Logistics reflect both the growing demand for eCommerce logistics as well as SingPost’s progress in expanding its share in this growing market.
Retail & eCommerce was higher by 5.6% where vPOST and the front–end web solutions business were able to offset the decline in revenue from financial services and retail agencies.
Mail revenue grew 1.6% to S$125.1 million where the postage revision from October 2014 offset the effect of declining traditional mail volumes and the partial loss of revenue after the divestment of Novation Solutions and DataPost (HK) in the first quarter. SingPost is expected to record an estimated gain of above S$30 million from the divestment of Novation Solutions and Datapost (HK), as well as DataPost (pending completion).
Total expenses increased by 24.9% to S$222.7 million, broadly in tandem with revenue growth, as the group spent on international expansion measures. The largest cost increase was for volume-related expenses due to higher international postal traffic and increased eCommerce-related deliveries.
M&A-related expenses also increased as SingPost continued to create long term shareholder value by focusing its resources to invest in eCommerce logistics, improving productivity in the customer facing processes and back office, as well as forging partnerships to diversify and expand its overseas network. In June 2015, the company invested S$4.6 million in HUBBED Holdings to expand its service offering for parcel delivery and collection in Australia.
Cash used for investing activities for the quarter was S$80.2 million, deployed principally to the construction of the eCommerce Logistics Hub in Tampines, Singapore and for additional POPStations for parcel collections.
Dr Wolfgang Baier, SingPost’s Group CEO, said: “We have a set of numbers that demonstrates the progress we are making in the transformation of SingPost. This quarter, our revenue and net profits are our highest ever. The partnerships we have built and the M&As we have done are showing in our numbers. We are adding one or two major eCommerce customers each month.
“Just three weeks ago, we announced that we have a new arrangement with Alibaba to create an end-to-end logistics platform around our reorganized subsidiary Quantium Solutions International. We will embark on a joint strategic business development framework with Alibaba and they are increasing their equity in us from 10.23% to 14.51%.”
Alibaba Group is investing about S$279 million (US$206 million) in its e-commerce logistics cooperation with Singapore Post to expand their joint activities in the Asia Pacific region. The Chinese e-commerce giant is increasing its stake in the parent company from 10% to 14.5% by buying S$187 million (US$139m) worth of shares.
In addition, Alibaba Group will take a 34% stake in Quantium Solutions International (QSI), SingPost’s Asian e-commerce logistics subsidiary, for up to S$92 million (US$68m). QSI, offering end-to-end e-commerce logistics and fulfilment services in 10 countries across the Asia Pacific region, will reorganise its business and become the joint venture vehicle of SingPost and Alibaba Group.
