Singapore Post achieved strong, double-digit growth in profits and revenues in the first nine months of the financial year ending December 31, 2015, especially thanks to its continuing expansion in e-commerce and logistics activities, along with contributions from new subsidiaries.
The listed company increased group revenue by 24.3% to S$834 million in the first nine months of FY2015/16 and net profit grew 17.6% to S$143.5 million. Operating profit improved 18.5% cent to S$176.8 million due to strong growth in logistics and e-commerce-driven international parcel volumes as well as one-off gains from divestments. These improvements came during the peak season and through increases in scale and synergies from post-merger integration of new subsidiaries.
SingPost explained that these figures confirm the group’s transformation into a global e-commerce logistics company, with the underlying net profit also growing 1.2% to S$121.8 million.
Mervyn Lim, Deputy Group Chief Executive Officer (Corporate Services) and Group Chief Financial Officer, said: “Our transformation is showing in our financial results, which reflect how SingPost is on a new growth trajectory. The investments we made in the last few years are driving up both top and bottom line growth, with group revenue up 24% and net profit up 18%. With the integration of these acquisitions into existing operations, we can expect further synergies and expansion of our e-commerce business as we provide retail brands with easy one-stop access to e-commerce markets in the US, Europe, China and the rest of the Asia Pacific region.”
E-commerce related revenues rose 53%, accounting for 33.4% of the group’s revenues, up from 27.1% on the previous year. E-commerce activities were the main growth driver across all three business segments.
SingPost highlighted that its expansion beyond a traditional domestic mail business into the fast-growing global e-commerce logistics market was reflected in the geographical distribution of its revenue streams. Thus, its revenues from the business overseas increased to 41.9% of the group’s revenues in the first nine months of the year, up from only 31% during the same period the previous year.
Over the past nine months, the company’s e-commerce logistics capabilities in the region were boosted by the integration of SingPost’s business Quantium Solutions and CouriersPlease, one of Australia’s leading metropolitan small parcel delivery businesses, acquired by Quantium Solutions in December 2014, as well as SingPost’s partnerships. This allowed the company to provide efficient end-to-end logistics solutions to its mono-brand clients and their customers ranging from warehousing to convenient touchpoints, flexible doorstep delivery and returns.
Revenue from SingPost’s logistics operations increased 39.5% to S$458.4 million on the back of growing contributions from e-commerce logistics activities and the revenues of new subsidiaries. Operating profit was up 57.6%. Operating profit margin for the third quarter rose to 7.5%, up from 5.7% the prior year. This was a 31.6% improvement over last year’s peak season.
Mail revenue was stable at S$372.3 million despite no more revenue from hybrid mail with the divestment of Novation Solutions in the first quarter and DataPost in the second quarter. Excluding the impact of the divestments, mail revenue was 4.5% higher compared to the same period last year. Operating profit rose 5.2%.
International parcel volumes expanded strongly boosted by growing e-commerce driven, cross-border deliveries, more than offsetting declines in traditional letter mail. This together with improvements in productivity and service efficiency from investments in mail infrastructure resulted in positive performance overall.
SingPost’s revenues from its retail and e-commerce division rose 50.8% to S$102.6 million due mainly to higher e-commerce growth and the inclusion of the revenues from its new US subsidiary TradeGlobal worth S$29.4 million. Operating profit declined on lower contributions from financial services and continued investments in e-commerce infrastructure and capabilities.
Last month, SingPost announced the launch of SP Commerce, a global omni-channel commerce and fulfilment platform, integrating its e-commerce division SingPost eCommerce with US-based e-commerce companies TradeGlobal Holdings and Jagged Peak acquired last year.
Marcelo Wesseler, Chief Executive Officer of SP Commerce, commented: “Our transformation into a global end-to-end e-commerce logistics enabler is taking shape. SingPost now processes US$3 billion of merchandise every year. We do this through more than 50 distribution centres across over 18 countries that include major e-commerce markets in the USA, Europe, China and the rest of the Asia Pacific. We provide end-to-end e-commerce logistics solutions to more than 100 mono-brand clients.”
The increase in the group’s operating profit for the segment “Others” in the first nine months was generated through one-off gains from the divestment of Novation Solutions and DataPost, with total expenses rising 30.5% to S$737.1 million in the first nine months, in tandem with the inclusion of new subsidiaries and growth in business volumes. Administrative and other expenses increased as a result of higher property related expenses, such as warehouse rental costs, and professional fees related to SingPost’s growth and transformation initiatives.
