Logistics growth offsets falling mail revenue for SingPost
February 18, 2015
Growth from its logistics business more than offset a fall in mail revenues for SingPost in the final quarter of 2014, according to figures released this month. SingPost claims to be the leading provider of mail, logistics and ecommerce in Singapore and the Asia Pacific region, with operations in more than ten countries.
Group revenue grew 7.6 per cent to S$239.6m in the quarter ending December 31, 2014, underpinned by contributions from logistics and ecommerce related activities, offsetting the decline in traditional mail revenue.
“SingPost embarked on its transformation journey in 2003 when the company IPO-ed,” said Lim Ho Kee, chairman of SingPost. “Concerted efforts went into strengthening the postal business even as the company set about to diversify its revenue streams and to go regional. While we have managed to grow non-mail revenue and achieved a more balanced revenue portfolio, it is critical that we continue with the transformation.”
Revenue in the mail segment fell 2.3 per cent to S$130.1m as a result of lower contributions from domestic mail and international mail. Logistics revenue grew 20.7 per cent to S$122.1m with better contributions by the business lines.
Quantium Solutions and Singapore Parcels continued to grow e-commerce logistics contributions while freight forwarding revenue from Famous Holdings increased with new subsidiaries. Revenue from General Storage’s self-storage business improved with additional facilities and the inclusion of new subsidiary The Store House in Hong Kong.
In retail and e-commerce, revenue grew marginally to S$22.9m as the decline in traditional retail and agency services and financial services was offset by growth in e-commerce services. Rental and property-related income declined 3.9 per cent to S$10.9m, mainly due to lower rental income from Singapore Post Centre.
The group continued to invest in its transformation initiatives and service quality improvements. The rise in labour and related expenses was mainly due to increased operating costs in Singapore and continuing investment into the growth transformation.
The group’s net profit grew 7.3 per cent to S$42.2m. Excluding one-off items, underlying net profit was S$42.4m, an increase of 5.4 per cent from the previous year.
“Despite the declining mail business, we are investing in service quality and focusing on efficiency and productivity improvements,” said Wolfgang Baier, group chief executive officer of SingPost. “We remain committed to provide our Singapore customers a better service experience as we take our public service obligations very seriously. The new integrated sorting machines costing S$45m are now fully operational. These new machines increase letter sorting capacity by 17 per cent and mechanisation rate to 95 per cent, improving efficiency and accuracy at the same time.”
He said the group would continue to transform its post office network with round-the-clock touch-points using digital technology.
Baier added: “For Q3, our logistics and e-commerce-related businesses contributed to revenue growth as we continued to push ahead with our transformation to become the regional leader in e-commerce logistics and trusted communications.”
In line with its strategic objective of building a regional e-commerce delivery network, Quantium Solutions acquired 100 per cent of CouriersPlease Holdings in December 2014. CouriersPlease operates one of Australia’s leading metropolitan small parcel delivery businesses. With the acquisition, the group is able to roll out end-to-end services across e-commerce, forwarding, warehousing and delivery in Australia.
SingPost also acquired Famous Pacific Shipping NZ in January 2015, enabling subsidiary Famous Holdings to broaden its freight network and establish an entry point into the New Zealand freight market. FPSNZ is a New Zealand-based freight forwarder focusing primarily on sea and air freight forwarding together with customs clearance for inbound and outbound shipments from New Zealand.
Among initiatives during the quarter was the set-up of a one-stop service at its Lock+Store facility for small businesses and blogshop owners. Integrated services include a bulk package counter for faster multiple package posting leveraging its Ezy2ship technology, Smartpac Lite envelopes for packages less than 1kg and self-storage facilities. Lock+Store has also rolled out serviced offices to cater to the growing demand for small office set-ups among SMEs.
The group said it would continue to explore investment opportunities in Asia Pacific as part of its growth strategy. It has been expanding its end-to-end e-commerce logistics network in the region and investing in e-commerce logistics infrastructure, technology and capabilities.
“We will continue to drive the group’s transformation, focusing on strategic investments in infrastructure, technology, operations and talent,” said Baier.