Singapore Post’s latest quarterly financial results suggest that it is a post office in the midst of a transformation. For the three-month period ending June 30 2013, group revenue increased almost 33.0% to S$201.3m (US$158.8m). An impressive increase compared to same period in 2012. However, total expenses increased 39.4% resulting in a 2.0% decline in net profit to S$36.2m (US$28.6m). This has the potential to raise concern, however it should be noted that this is a company that has undergone many transformations since its inception in 1819.
Over the past few years, Singapore Post has made numerous acquisitions across the region to expand its service offerings in logistics, e-commerce and digital services to name a few. As a result of acquisitions, investments and new services, its reach spans over 200 countries.
For its main divisions, quarterly revenue either increased or remained flat. For example, Mail revenue increased 13.7% to S$114.7m (US$90.5m) thanks to the growth in international e-commerce package growth and its acquisition of Novation Solutions, a provider of digital mail solutions. Not surprisingly, domestic letter mail volume declined; the seventh consecutive quarter of declines.
Logistics revenue was S$93.8m (US$74.0m). The division’s strong performance was attributed to the recently acquisition of the freight forwarding company Famous Holdings and Lock + Store along with increases in regional e-fulfilment services.
Its retail and e-commerce segment reported revenue of S$20.8m (US$16.4m) and no growth as compared to same period in 2012. While its e-commerce companies such as vPost, SP eCommerce and Clout Shoppe grew, it’s financial and retail services slowed.
Singapore Post’s latest financial results indicate that although expenses greatly increased, these were attributed to the numerous investments and acquisitions the company has made in order to diversify its service offerings. While Mail still represents over 53.3% of the total revenue, that is down from 63.3% of total revenues in 2012. Logistics, however, is gaining ground quickly and now makes up 39.5% of total revenue compared to 27.5% in 2012.
Like many other post offices around the world, the rise of e-commerce has benefited Singapore Post and is an integral part of its strategy. Transport Intelligence estimates the Asia Pacific e-commerce logistics market is valued at over US$83.1bn with South East Asia making up about 11.0% of the total region’s e-commerce logistics market.
While there is great opportunity in e-commerce logistics, Singapore Post will need to be mindful of rising expenses and increasing competition from other logistics and small parcel providers.
Note: 1 Singapore Dollar= $0.789 US Dollar
For further insight into the e-commerce logistics markets, please see our Global e-commerce Logistics Series.The series includes extensive market sizing and financial data, insightful commentary on the rapid growth in e-commerce sales in recent years across three key geographical regions: North America, Europe and Asia Pacific. The reports can be purchased individually or as a bundled package at a discounted rate.