Singpost H2 profit up 93.4% at S$66.9m; final dividend of S$0.0056 per share proposed

This is despite revenue falling 5.9 per cent to S$859.5 million

THE net profit of Singapore Post (Singpost) in its second half ended March rose 93.4 per cent to S$66.9 million from S$34.6 million the year before.

This resulted in earnings per share (EPS) of S$0.0273 for the second half, up from S$0.013 in H2 FY2023.

Including distribution to holders of its perpetual securities, EPS for the period stood at S$0.0297, up from S$0.0154 a year prior.

The group proposed a final dividend of S$0.0056 per share, amounting to S$12.6 million for the financial year, up 40 per cent from a per-share dividend of S$0.004 for the same period in the year earlier.

Including its interim dividend of S$0.0018 per share paid out last November, total dividends amount to S$0.0074 per share, representing 40 per cent of the group’s underlying net profit.

Revenue for H2 FY2024 declined 5.9 per cent to S$859.5 million, which the postal services provider on Friday (May 10) attributed largely to reduced sea freight revenues.

The group’s bottom line was buoyed by S$38.8 million in exceptional gains, which were up 138.7 per cent year on year, mainly due to a fair-value gain on Singpost Centre.

Singpost said it is considering divesting the S$1.1 billion building, which a strategic review recently designated as a non-core asset.

During a media briefing after the results were posted, group chief financial officer Vincent Yik noted that the building has been largely carried at valuation, hence the valuation uplift.

Operating expenses for the period fell 6.2 per cent to S$809 million, while operating profit rose 3.3 per cent to S$53.5 million for the second half of the fiscal year.

Core business fundamentals

For the full year, Singpost’s net profit grew 217.4 per cent to S$78.3 million versus S$24.7 million in FY2023.

Revenue slid 9.9 per cent on the year to S$1.7 billion, which Singpost largely attributed to the reduction in sea freight revenues. Yik noted that adverse currency movements also hit the company’s top line. For the full year, the estimated impact on revenue was just above S$70 million, and above S$14 million for operating profit.

To hedge the currency risks, Singpost ensures its revenue and costs are in the same currency. For example, in Australia, the company funds expenses with local debt, as opposed to raising equity.

The Australia business, which deals with delivery services and e-commerce logistics solutions, generated around half the group’s revenue for FY2023. It also has businesses in Japan, Hong Kong, Europe and New Zealand.

Yik said this risk comes with an exposure to international business. “The revenue and operating profit we gain from moving to (the Australian market) is far bigger than the costs that we will incur,” he noted. The group nonetheless said operating fundamentals of its core business have improved for the year, though operating profit declined 8.8 per cent to S$84.9 million due to lower operating profit contributions from its subsidiary, Famous Holdings.

In Singapore, the October 2023 postage rate hike and e-commerce growth have been significant business drivers.

Total e-commerce volumes in the Republic rose 11 per cent year on year. The logistics for e-commerce segment now contributes 41 per cent of its Singapore revenue, comparable with logistics for letter-mail and printed papers, which stands at 47 per cent.

Group chief executive Vincent Phang said the e-commerce segment now represents a “tangible opportunity” in the replacement of letter-mail in the near term, with e-commerce touchpoints – through which customers can send and pick up online orders – likely to become “more pervasive” in time.

In its outlook, the group said the economic and business landscape “continues to be marked by ongoing challenges” of slower global trade, inflationary pressures and geopolitical tensions.

Phang said: “Our transformation continues to yield results in our core businesses as we execute our strategy.”

Shares of Singpost ended Friday S$0.05 or 1.1 per cent higher at S$0.465.