Still-rising costs shred SingPost 4Q profit 14.6%

As domestic mail volume plummets again.

Singapore Post Limited (SingPost) has announced its unaudited results for the fourth quarter and full year ended 31 March 2013, revealing rising costs amidst 6th consecutive quarter of decline in domestic mail volume.

SingPost though said it has seen some promising revenue growth from the consolidation of new subsidiaries and Group-wide e-commerce related activities.

Net profit declined 14.6% to S$26.1 million in Q4. Full year net profit declined 3.9%. Excluding one-off items, underlying net profit was higher by 4.1% for FY2012/13.

For the full year, SingPost saw its first-ever annual decline of 2.6% in letter mail volumes. However, growth in domestic and international e-commerce packets, as well as increased hybrid mail contributions boosted overall Mail revenue. Excluding Novation Solutions, Mail revenue grew 9.8% to S$105.8 million in Q4, and 8.2% to S$417.0 million for the full year.

In Logistics, first-time consolidation of General Storage and Famous Holdings improved revenue. Excluding the two new subsidiaries, Logistics revenue grew by 11.2% to S$60 million in Q4, driven by e-fulfilment growth in Quantium Solutions, Speedpost and transhipment business. For the full year, revenue grew 9.5% to S$235.7 million, excluding contributions from the new subsidiaries.

Q4 revenue for Retail & Financial Services increased 0.4% to S$18.2 million, with growth in retail products and Clout Shoppe contributions offsetting the decline from financial services and agency services. Annual revenue growth was 5.7%. Rental and property-related income grew by 12.5% to S$11.2 million with rental income growth
in Q4. For the full year, it grew 1.4% to S$42.9 million.

Overall revenue grew 25.0% to S$182.4 million in Q4, with the consolidation of newly acquired subsidiaries as well as contributions from e-commerce related activities across all business segments. Contributions from new subsidiaries included Novation Solutions which was acquired in May 2012, General Storage Company in January 2013, and Famous Holdings in February 2013. Full year revenue grew 13.9% to S$658.8 million.

Total expenses for Q4 were higher at S$163.8 million, attributed to the Group’s rising costs of doing business in Singapore, continued investments to enhance service quality and productivity and growth and consolidation of new businesses. Despite the Group’s productivity push, inflationary cost increases continued to have an impact on expenses. For the year, total expenses rose 19.1%.

Dr Wolfgang Baier, SingPost’s Group Chief Executive Officer said: “The global postal industry is under tremendous pressure. SingPost is also facing a rapidly changing and challenging postal landscape amid rising costs. Domestic mail volume has declined for the 6th straight quarter.

During the year, inflationary cost increases continued to impact our business despite the Group’s mitigating measures which included raising productivity and optimising resources and operations. We have been prudent in spending only in areas that contribute directly to either service improvement or revenue growth. The domestic mail volume decline was mitigated by the strong contributions from higher international e-commerce packages and mailroom management business. The Group’s transformation initiatives are necessary to survive the continuous mail volume declines and to meet customers’ changing needs.”