Singapore Post Limited (SingPost) announced its results for the six months ended September 30, 2022, revealing the highest revenue recorded in the Group’s history for a half year, but the Group also recorded a loss loss of S$2.4 million for the first half and a net loss attributable to shareholders of S$9.9 million.
Revenue was driven by growth in the Logistics segment, which included the consolidation of Freight Management Holdings Pty Ltd (FMH) 51% owned in Australia. Group operating profit decreased by 19.1%, as higher Logistics profit was offset by lower performance in the Post and Parcels segment. The Group’s performance in the second quarter showed a strong improvement compared to the first quarter, with an operating profit tripling compared to the performance of the first quarter.
The Group recorded an underlying net profit of S$13.2 million. However, due to a fair value charge of S$21.0 million resulting from the increased liability to buy back put options on FMH due to a higher valuation of the company, the Group has recorded a net loss of S$2.4 million for the first half and a net loss attributable to shareholders of S$9.9 million.
Mr. Vincent Phang, Managing Director of SingPost Group, said, “The group is becoming a global logistics player with digital capabilities and sustainable, cost-effective solutions. We continue to execute our transformation efforts with investments made in Australia, executing our Future of Post strategy for our domestic business and re-launching international business. In Australia, we are building a technology-driven B2B and B2C integrated logistics business, where revenues are now more than 42% of Group revenue, up from 17% a year ago.
Business segment performance
In the Logistics segment, revenue increased by 79.4%, mainly driven by the consolidation of FMH from December 2021 and growth in international freight volumes. The Logistics segment now represents the most important segment of the Group in terms of turnover and contribution to the result.
In Australia, FMH recorded strong growth, both organically and through acquisitions. Regarding the exceptional fair value charge, Mr. Vincent Yik, Group Chief Financial Officer, said: “FMH’s strong performance in the short term has led to a higher valuation of FMH. We expect FMH’s performance to continue the growth trajectory. With this, the value of our investment has increased, so the resulting effect is the fair value charge on the P&L.
Famous Holdings revenue increased 13.3% as ocean freight rates remained strong in the first half.
With significant new contributions from FMH, the operating profit of the Logistics segment reached S$41.5 million, more than double the S$16.2 million in the same period last year.
In the Post and Parcel segment, revenue decreased by 19.6% to S$261.7 million due to the difficult operating environment, particularly in the first quarter.
For the Post and International Parcel (IPP) activity, air transport rates remained high in the first quarter. Supply chain disruptions persisted as various Chinese cities went into pandemic lockdown, reducing volumes and further increasing transportation costs given that the bulk of our cross-border e-commerce logistics volumes originate from China. This resulted in an operating loss for the IPP business in the first quarter. Additional steps were taken to manage transportation costs, such as chartering flights to reduce reliance on air freight rates, which helped stabilize business and improve margins in the second quarter.
At Domestic Post and Parcel (DPP), excluding the impact of a large e-commerce customer which has internalized part of its logistics, e-commerce logistics volumes continue to grow with higher volumes with customers as well as new gains , reflecting the quality of service we have maintained. Postal volumes (letters and printed matter) continued to decline as expected. Declining revenues, along with rising operating costs such as labor, fuel and utilities related to the operation of the postal network, led DPP to record an operating loss in the first trimester. New customers and additional volumes helped improve margins in the second quarter.
Lower DPP and IPP revenue, along with higher air transport, fuel and utility operating costs, resulted in an operating loss of S$12.1 million for the segment Post and parcels in the first half, which is entirely attributed to the first quarter.
The Real Estate segment recorded a 15% decline in revenue to S$50.8 million due to the disposal of the GSC self-storage business in December 2021. The SingPost Center occupancy rate was 96 .7% as of September 30, 2022.
Operating profit, excluding GSC, was slightly lower at S$22.7 million due to higher operating costs such as utility expenses.
For the first half of fiscal year 2022/23, the Board of Directors declared an interim dividend of 0.18 cents per common share (single-tier tax exempt) for the six months ended September 30, 2022, at pay on November 30, 2022. approximately 30% of the underlying net profit for the first half of 2022/23.