The 1st quarter FY17/18 result on SingPost is of an interest to me.
Below are the summary of the result comparing 1st quarter 17/18 to 1st quarter 16/17:
Revenue increase by 6.2% due to Postal and Logistic segments. Under Postal segment, International mail revenue growth at SGD $12.8 mill increase offset by Domestic mail revenue. Under Logistics segment, revenue growth at SGD $9.6 mill driven by higher contribution from SP Parcels, Couriers Please and Famous Holdings. However, eCommerce segment revenue decline by SGD $0.6 mill due to TradeGlobal issue as previously reported in the news. Net revenue increase by SGD $20.7 mill.
Operating Cost increase by 11.1% due to labour cost, volume-related cost, depreciation and finance expenses. Largest contributing cost is Volume-related cost, an increase of SGD $24.1 mill, due to increase in international mail terminal dues and conveyance costs. Other notable costs increase are labour at SGD$ 4.4 mill due to higher contract and temporary staff cost, and depreciation at SGD $3.8 mill due to higher Regional eCommerce Logistics Hub and shortening of TradeGlobal’s intangible assets amortisation period, and finance expense at SGD $2 mill due to unfavourable non-trade related foreign translation differences. Net operating cost increase by SGD $33 mill.
Base on reported figures, total profit decrease by 13.6%.
Looking forward, SingPost Centre is expected to open in October 2017 and will start to rake in rental income. Also, SingPost has strong cash position of SGD $364.4 mill and is poise for new business opportunities.
Commentary by Maverick Chung