SINGAPORE - Singapore Post has reported group operating profit of $27.7 million for the third quarter ended Dec 31, 2023, down 18.3 per cent from the previous corresponding period’s $33.9 million.
Group revenue dipped 8 per cent to $455.4 million from $495.1 million year on year.
Group operating expenses narrowed by 6.7 per cent to $430.1 million from $460.8 million.
In a business update on Feb 8, the company said it had registered good performances across its businesses in the year-end seasonal peak, despite a difficult macroeconomic environment and continued strength of the Singapore dollar against the Australian dollar and Chinese renminbi.
The company noted that with 86 per cent of its revenue generated internationally, the strong Singapore dollar has had a significant impact on the group’s consolidated performance.
On a constant currency basis, the group’s operating profit would have been down an estimated 3.9 per cent year on year.
All businesses posted positive operating profits in the quarter, with the profitability of its international cross-border business continuing to improve and the Australian business stable amid slowing market conditions.
The margins of the international post and parcel business improved despite a slowdown in global trade and reduced volumes of China exports, which were down 12 per cent in the quarter.
Air conveyance costs fell 30 per cent year on year, leading to significant margin improvement.
Domestic post and parcel revenue increased as a result of a postage adjustment in October 2023, and a 16 per cent increase in e-commerce volumes.
With new customer acquisitions and “continued best-in-market service levels”, the profitability of the delivery business has improved significantly, it said.
However, the post office network remains unprofitable and is being reviewed, it added. SingPost said that it would work with the authorities towards a framework for the long-term commercial viability of the domestic postal service.
Revenue and profit from the freight-forwarding business, through subsidiary Famous Holdings, have declined in line with the weakening of sea freight rates and volumes, although margins have remained constant.
Revenue and operating profit from the property segment were “relatively steady”, with the occupancy rate of SingPost Centre at 96.3 per cent as at Dec 31, 2023, down from 98.2 per cent as at March 31, 2023. Retail mall space was at full occupancy, and office space occupancy was around 95 per cent.
As at Dec 31, 2023, the group had $437.3 million in cash and cash equivalent from $128.7 million as at March 31, 2023.
Total equity remained almost unchanged at $1.4 billion – down 0.4 per cent.
The business environment for 2024 is expected to remain challenging amid the global geopolitical situation, continued inflationary pressures and weak consumer spending, it said.
A strategic review of the group, which aims to make a transition into a logistics business over time, is in the final stage of completion. A formal announcement of the outcome will be made before the end of the financial year.
Shares of SingPost closed on Feb 9 at 40 cents, down 1.23 per cent. THE BUSINESS TIMES
