SingPost – BT

SingPost: New players will squeeze margins

Q3 earnings rise 7.8% to $36.8m on better results for all business segments

SINGAPORE’S liberalisation of basic mail services and the entry of new players will squeeze margins for Singapore Post, the company said yesterday.

In a statement announcing its third-quarter results, the postal operator said that along with rising operating costs in the economy, ‘this will result in margin pressure’.

SingPost, which held the monopoly on basic mail services, said it will pursue and implement initiatives to grow its core mail and logistics businesses. As part of its diversification strategy, it will leverage its retail and distribution network to offer higher value products and services to its customers.

The company is also looking at ways to extend its regional reach.

SingPost is continuing to review its non-core businesses and is exploring opportunities to ‘unlock’ the value of SingPost Centre.

For the third quarter ended Dec 31, 2007, it posted a net profit of $36.8 million or 1.914 cents per share, up from the previous corresponding quarter’s $34.1 million or 1.782 cents per share.

The earnings rise came on the back of better results for all its three business segments of mail, logistics and retail.

Q3 revenue grew 9.2 per cent to $122 million. An interim quarterly dividend of 1.25 cents per share, pay- able on Feb 29, was also announced yesterday.

Mail revenue, which made up the bulk of sales, increased 9.5 per cent to $94.2 million on higher mail volumes.

The logistics segment turned in a revenue of $17.9 million, a rise of 5.3 per cent, from increased Speedpost traffic and growth in its vPost on-line shopping transactions.

Retail revenue grew 7.9 per cent to $15.6 million, as growth in financial services and retail products continue to offset the decline in agency/bill presentment services, said the company.

Rental and property-related income improved by 21.6 per cent to $6.2 million, as a result of higher rental rates and yield enhancement initiatives at SingPost Centre.

Total expenses rose 10.7 per cent to $84.9 million as a result of increased labour and volume-related costs.

The first nine months saw revenue of $353.5 million, up 9.3 per cent, while net profit was $114.8 million, a 13.5 per cent rise.

SingPost’s group chief executive officer Wilson Tan said: ‘The third quarter is traditionally a busier period for SingPost because of the year-end festive season.’

‘In mail, despite the decline in year-end festive postings, we achieved steady growth in direct mail in tandem with a robust Singapore economy,’ he added.

Mr Tan also noted that on the retail front, the company leveraged its network of post offices by expanding its service offerings with festive shopping through shop@post, featuring items such as notebooks, iPods and branded watches.

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