Weak domestic parcels threaten SingPost growth: analysis

How it will affect SingPost’s inbound and transshipment mail remains to be seen.

Declines in domestic letter volumes will continue to challenge Singapore Post’s growth as people are migrating to electronic messaging, a DBS Equity Research said.

The company’s operating profit for Q2 declined 22.2% YoY to S$38.7m as all segments except property saw declines in operating profit. Underlying net profit also dropped 4.6% YoY to $26.8m.

Also read: SingPost profits up 10.3% to $27.73m in 2019

SingPost stated that its domestic revenue fell due to an accelerated decline in business letter volumes and reduction in admail volumes. The rate of decline in business letters has reportedly accelerated in the last two quarters as structural trend of e-substitution continues.
Terminal dues are also bound to surge by FY20-21, although its impact to SingPost’s inbound and transshipment mail remains unclear, said analysts Rui Wen Lim and Sachin Mittal.

However, the recent increase in international mail rates and changes in domestic postal products will guide the company “in the right direction” as these may subsidise the added charge in terminal fees and lessen the burden of doorstep package deliveries.

Meanwhile, freight forwarding will continue to dampen logistics performance due to global slowdown caused by the ongoing trade war, the analysts concluded.