For the second quarter of its financial year, Singapore Post has reported that its net profit fell by 27.9%, thanks to higher e-commerce expenses, costs related to its new regional e-commerce logistics hub, lower rental income and declines in domestic mail. Conversely, revenues increased by 22.3% year-on-year on the inclusion of contributions from new subsidiaries.
Postal revenues were approximately stable but operating profit fell by 10.6%. Mitigating lower domestic letter volumes was more cross-border e-commerce related deliveries.
Logistics revenues fell by 1.2% to S$154.1m. Singapore Post asserted that lower contributions came from non-e-commerce related activities amid a “global economic downturn.” Operating profit fell by 35.6% as higher costs associated with the company’s regional e-commerce hub were noted while pricing pressure in the “e-commerce logistics space” was also a factor.
Overall, for the six months ended September 30, 2016, total e-commerce related revenues across SingPost’s Postal, Logistics and eCommerce divisions more than doubled from S$150.1m to S$319.5m, now accounting for almost half of Group revenues. Expansion of cross-border business across the company, coupled with the inclusion of new US subsidiaries TradeGlobal and Jagged Peak were behind the rise. Overseas sales now made up 50.8% of total revenues, up from 39.5% last year.
Mervyn Lim, Covering Group Chief Executive Officer, said, “We are taking a long term view as we build scale for future profitability. While financial benefits will not be immediate, initiatives such as the Regional eCommerce Logistics Hub that was opened on 1 November 2016, as well as our deepening collaboration with Alibaba, will strengthen our eCommerce logistics network for future growth.”
Source: Singapore Post