Singapore Post generated strong double-digit rises in revenues and profits in the first half of 2015 as it continued to expand its eCommerce and Logistics activities.
The postal operator’s revenue increased by 20% to S$517.8 million in the six months ending September. Operating profit was 24.4% higher at S$122.2 million due to steady operating performance in Mail and Logistics combined with one-off gains from divestments. Net profit was S$100.0 million, an increase of 26.9%. Underlying net profit rose 1.4% to S$77.8 million.
eCommerce related revenue is now 29% of Group revenue as eCommerce activities continue to grow strongly. Revenue from Logistics operations increased by 43.5% to S$296.1 million on the back of growing contributions from SingPost's eCommerce logistics activities and the inclusion of new subsidiaries. Operating profit was up 45.3%. This growth reflects SingPost's increasing share of the fast expanding eCommerce market and demand for eCommerce logistics.
Mail revenue declined 2.0% to S$241.7 million as revenue from hybrid mail ceased with the divestment of Novation Solutions and DataPost. Excluding the impact of the divestments, Mail revenue was flat compared with the same period last year. Operating profit rose 6.7% as SingPost continued to focus on productivity and efficiency of its mail operations, particularly with investments in mail infrastructure.
Retail and eCommerce revenue rose 6.4% mainly due to the 33.4% growth in eCommerce as more revenue was generated by new eCommerce customers. This growth helped to offset the decline in retail and financial services revenue. Operating profit declined as a result of investments in eCommerce infrastructure and capabilities.
As the Group continues to expand its overseas footprint, overseas revenues in the first half increased to 39.5% of group revenue compared to 30.0% in the corresponding period last year.
For the July – September quarter, revenue rose 19.4% and net profit rose 38.5%. Excluding one-off items, underlying net profit declined 4.8% as the Group continues to invest in eCommerce infrastructure and capabilities to accelerate customer acquisitions in the burgeoning global eCommerce market.
Total expenses grew 26.5% to S$463.8 million in the first half, mostly in line with revenue growth. Volume-related expenses increased due to enlarged business activities in eCommerce and traffic volumes. Administrative expenses rose mainly due to higher M&A related professional fees as SingPost continues to focus on growth and transformation initiatives.
Cash generated from operations remained healthy. Operating cash flow before working capital changes was S$96.3 million for the first half of FY2015/16. Cash used for investing activities for the half year was S$175.1 million, deployed mainly for the construction of the eCommerce Logistics Hub and also for the new retail mall at Singapore Post Centre.
As at 30 September 2015, the Group's cash and cash equivalents stood at S$326.6 million, with a net cash position of S$87.8 million.
Wolfgang Baier, SingPost's Group Chief Executive Officer said: "We emerge with a more stable and stronger foundation to our business since the start of our accelerated transformation. It is now showing in the numbers. Group revenue and total profit grew about 20% and 27% respectively. eCommerce logistics continue to deliver strong revenue growth and eCommerce related revenue is now 29% of Group revenue, while overseas revenue grew to 39.5%."
In Singapore, the Group embarked on the development of a new retail mall in Singapore Post Centre. When completed in 2017, the retail space will be almost doubled to about 25,000 sqm and it will be the first retail mall to provide eCommerce logistics services. Customers can enjoy a converged online and offline shopping experience.
