Unexpected upside: SingPost’s labor costs surge 15% in Q2

Profit inched up but mail volumes declined.

The Postman shelled out more money on manpower this quarter, as SingPost registered a surprising 15% year-on-year increase in labor costs for Q2.

According to CIMB, the upside was brought about by escalating costs associated with the mail business, the setup of its new mail sorting centre, and the increased hiring in anticipation of higher volumes going forward.

“Despite cost pressures from the mail business, SingPost has found innovative ways to manage costs, such as introducing POPStations to make the delivery process more efficient. We believe cost savings will only be seen from 2HFY15 onwards when the new mail sorting centre is up and running, and when the new POPStations are fully rolled out (targeting 100 by end-FY15),” stated CIMB.

SingPost reported a 4.8% YoY rise in revenue to S$210.9m and a 5.1% increase in net profit to S$39.2m for the period.

Here’s more from CIMB:

Revenue grew 4.8% yoy, driven by the 24% yoy growth in the international mail segment as demand for transhipments continued to grow, and by the broad-based growth of 3.9% across the logistics segment.

Retail & ecommerce revenue also did well, growing 19% yoy on new customer acquisitions for
front-end ecommerce services (Levi’s, JRunway and other customers on the Omigo platform) and higher demand for vPOST services.

The segments that disappointed included hybrid mail (-9.3% yoy) and domestic mail (-2.5% yoy excluding one-off gain of S$1.5m) as letter mail volumes continued to decline.