SingPost second quarter profit down 2.5% to S$39.5mln

The Group’s total expenses up 10.3% to S$104.1mln even as its revenue surged 5.6% to S$137.6mln.

Singapore Post Limited (“SingPost”) announced on Friday its unaudited results for the second quarter and half year ended 30 September 2010, according to a SingPost report.

Steady Growth in Core Business
SingPost Group revenue improved 5.6% to S$137.6 million in Q2 FY2010/11, underpinned by growth in its Mail and Logistics segments.

Mail revenue increased 5.2% to S$92.2 million, on higher contributions from domestic mail, international mail and hybrid mail. In Logistics, revenue increased 5.0% to S$47.9 million with better contributions from Quantium Solutions and vPOST shipping activities. Retail revenue increased marginally to S$17.1 million, with growth in financial services offsetting the decline in contributions from agency services and retail business.

Rental and property-related income amounted to S$10.4 million, an increase of 2.9%, due to higher rental income from Singapore Post Centre.

The Group’s total expenses amounted to S$104.1 million, an increase of 10.3%.

Labour and related expenses rose on higher contract labour costs and the cessation of benefits from the government’s Jobs Credit Scheme. Volume-related expenses increased as a result of higher traffic expenses arising from growth in international traffic and conveyance costs. Administrative and other expenses rose due to higher property tax and other administrative expenses. Finance expenses included additional interest expenses from the S$200 million Fixed Rate Notes issued on 30 March 2010.

The Group’s net profit declined 2.5% to S$39.5 million. Excluding one-off items such as the amortisation of deferred gains on intellectual property rights and benefits from the Jobs Credit Scheme, the underlying net profit was S$36.5 million, an increase of 3.2% from S$35.4 million in the same quarter last year.

Said Mr Ng Hin Lee, Deputy Group Chief Executive Officer of SingPost: “We continue to see steady growth in our core business of Mail and Logistics in the second quarter while our Retail network remains a key touchpoint for our customers. We have recently introduced more convenience for our customers with the launch of an air-time transfer service and passport collection service at 20 of our branches.”

Positioned to Grow Overseas Contribution
Added Mr Ng: “In Q2, revenue contribution from overseas increased and we are seeing traction in the areas of e-commerce logistics and mailroom management. We will continue to grow revenue in the mail-logistics markets where Quantium Solutions has a presence.”

“Concurrently, we are strengthening our focus on expanding our regional business to further grow our overseas contribution and are actively seeking opportunities to diversify and grow.”

Review of First Half Performance
On the back of an improved economy in the first half of FY2010/11, the Group posted a 9.4% increase in revenue to S$275.8 million, underpinned by stronger performances by the Mail and Logistics segments.

The Group’s total expenses increased 14.4% to S$207.2 million in the first half of FY2010/11.

Net profit was level in the first half at S$80.2 million. Excluding one-off items such as the amortisation of deferred gains on intellectual property rights and benefits from the Jobs Credit Scheme, the Group recorded underlying net profit of S$73.8 million, a growth of 2.1% from S$72.3 million.

Interim quarterly dividend of 1.25 cents per share

Net cash from operating activities was lower at S$75.4 million, compared to S$88.5 million in the first half of last year, due to an increase in working capital.

The Board of Directors has declared an interim quarterly dividend of 1.25 cents per ordinary share (tax exempt one-tier) payable on 30 November 2010.