SingPost Q1 profits plummeted 40.4% to $18.72m

Its post & parcel and e-commerce segments performed poorly.

Singapore Post (SingPost) continued to be in its testing times as its profits for the first quarter of 2019 crashed by 40.4% to $18.72m from $31.38m last year. However, revenue was slightly higher by 3.3% to $372.58m from $360.55m.

According to its financial statement, operating profit of its post and parcel segment dipped by 3.8%. SP Parcels’ contribution rose thanks to domestic e-commerce last-mile deliveries but was beaten by the decline from domestic letter mails. SingPost’s international mail business suffered from higher terminal dues and lower margins.

“Domestic mail volumes are expected to trend downwards,” it said. “Whilst international mail has grown due to cross-border eCommerce deliveries, transhipment competition continues to be intense and volumes may come under pressure, especially with higher terminal dues. As part of our mitigating measures, we are managing our revenue mix while keeping focused on margins and profitability.”

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The logistics segment barely recovered from a $2.5m loss last year to a profit of $86,000 due largely to the turnaround in Quantium Solutions, which narrowed its losses by 44.6% YoY. Earnings contribution from Famous Holdings and Couriers Please rose.

Losses in SingPost’s e-commerce segment continued to widen to $9.3m due to the US businesses hit by pricing pressures that resulted in the price per order declining versus last year, as well as a change in sales mix with a decline in fulfillment revenue with higher gross margins, and growth in freight revenue which had a significantly lower gross margin. Technical labour costs also rose.

Property operating profit jumped by 67.1% to $13.2m boosted by rental income from the SingPost Centre retail mall. In the others segment, expenses jumped by 22.64% to $6.5m from $5.3m last year, due largely to trade-related foreign exchange losses.