SingPost’s arduous road to transformation fraught with lower revenue, escalating costs

The Postman’s growth hinges on acquisitions.

SingPost is aggressively trying to transform itself into the region’s dominant logistics player, but the Postman is a long way away from securing its desired transformation.

According to CIMB, SingPost’s third quarter results show that its key engines are stalling, and the group will have to hinge its growth on partnerships and acquisitions.

For instance, SingPost’s mail segment disappointed on multiple fronts, with both domestic and international mail revenue slipping year-on-year.

Domestic mail revenue was down 1.7% despite the postage rate hike, while SingPost chose margins over volume growth and subsequently lost competitiveness in the international mail space after the Universal Postal Union hiked terminal dues

Its logistics arm fared better, driven by contributions from new acquisitions.

“We believe SPOST still has a long road to transformation, and cost pressures will continue to erode value creation in the near-term,” stated CIMB.