Singapore Post (SingPost: S08 -1.27%) has disclosed a group operating profit of S$27.7 million for the third quarter concluding on Dec 31, 2023, reflecting an 18.3% decrease from the preceding corresponding period at S$33.9 million.
Group revenue witnessed a decrease of 8% to S$455.4 million from S$495.1 million year on year.
Operating expenses for the group narrowed by 6.7% to S$430.1 million from S$460.8 million.
In a business update on Thursday (Feb 8), the company acknowledged the positive performance across its businesses during the year-end seasonal peak, despite challenges in the macroeconomic environment and the continued strength of the Singapore dollar against the Australian dollar and Chinese yuan.
With 86% of its revenue generated internationally, the robust Singapore dollar has significantly impacted the group’s consolidated performance.
On a constant currency basis, the group’s operating profit would have experienced an estimated 3.9% decline year on year.
All businesses reported positive operating profits in the quarter, with the international cross-border business showing improved profitability and the Australian business maintaining stability amidst slowing market conditions.
Despite a 12% decrease in volumes of China exports in the quarter and a slowdown in global trade, the margins of the international post and parcel business improved. This was coupled with a 30% reduction in air conveyance costs, leading to substantial margin enhancement.
Domestic post and parcel revenue rose due to a postage adjustment in October 2023, coupled with a 16% increase in e-commerce volumes.
While the profitability of the delivery business improved significantly with new customer acquisitions and sustained service levels, the post-office network remains unprofitable and is currently under review. SingPost intends to collaborate with the authorities towards establishing a framework for the long-term commercial viability of the domestic postal service.
Revenue and profit from the freight-forwarding business, facilitated by subsidiary Famous Holdings, have declined in line with the weakening sea freight rates and volumes, although margins have remained steady.
Revenue and operating profit from the property segment remained relatively stable, with the occupancy rate of SingPost Centre at 96.3% as at Dec 31, 2023, and retail mall space fully occupied. Office space occupancy stood at approximately 95%.
As of Dec 31, 2023, the group held S$437.3 million in cash and cash equivalents, up from S$128.7 million as at Mar 31, 2023. Total equity remained nearly unchanged at S$1.4 billion, experiencing a marginal decline of 0.4%.
The business outlook for 2024 is anticipated to be challenging due to the global geopolitical situation, ongoing inflationary pressures, and subdued consumer spending.
A strategic review of the group, aimed at transitioning into a logistics business over time, is nearing completion. A formal announcement of the outcome is expected before the end of the financial year.
Shares of SingPost concluded on Thursday S$0.005 or 1.2% lower at S$0.405, prior to the update.
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