SingPost's net profit slumps 27.9% to $31.4m

No thanks to the losses in the US eCommerce business.

Despite a 16.8% uptick in its revenue for the past quarter to $369.4m, postal service provider Singapore Post still suffered a weak net profit of $31.4m, 28.5% lower than the previous period.

The group said the declines were due to the operating losses in the US eCommerce business, costs related to the new Regional eCommerce Logistics Hub, and a fall in domestic mail volumes.

Covering group CEO Mervyn Lim said SingPost is building out its capabilities, broadening and deepening its eCommerce logistics network to secure its future.

"There are challenges along the journey and it is going to take a number of years for our investments to contribute,” Lim noted.

Due to the poor performance of TradeGlobal, the Board of SingPost is of the view that there is a risk of significant impairment to TradeGlobal’s carrying value. The Board will also be conducting a review of all the investments of SingPost. Impairments, if any, will be assessed based on the results of the full financial year ending 31 March 2017 and future plans for the businesses.

Here are some of the highlights of the group's announcement:

In the Postal segment, Domestic mail revenue declined in line with lower letter mail volumes, in particular with financial institutions pushing e-statements. This was offset by growth in International mail revenue which was driven by higher cross-border eCommerce related deliveries, especially with higher volumes from the Alibaba Group. Consequently, Postal revenue rose slightly in the third quarter and nine months respectively.

Logistics revenue rose by 5.6% and 5.2% for third quarter and nine monthsrespectively, driven by higher contribution from Couriers Please and Quantium Solutions from increased eCommerce-related activities.

eCommerce revenue rose with the inclusion of new US subsidiaries, TradeGlobal from 14 November 2015 and Jagged Peak from 8 March 2016.

Rental and property-related income decreased 1.4% and 7.1% in the third quarter and nine months respectively. This was due to lower retail rental revenue with the redevelopment of Singapore Post Centre (“SPC”) retail mall, which is due for completion by mid-2017.

Miscellaneous other income was a loss of S$1.8 million and a gain of S$7.3 million in the third quarter and nine months respectively, compared to gains of S$3.0 million and S$46.2 million in the comparative periods. The drop in Q3 was due to trade-related translation differences whilst the decline in 9M was due to one-off gains from the disposals of Novation Solutions and DataPost HK in Q1 last year and DataPost in Q2 last year.