Singapore Post Limited Mails in Higher Quarterly Revenue

Last Thursday, Singapore Post Limited (SGX: S08), or SingPost for short, posted a year-on-year revenue increase of 30.2% to S$222.6 million for the third quarter of its Financial Year 2014 (3Q 2014). Its net profit, however, was flat at S$39.4 million.

SingPost would likely be a familiar name for most Singaporeans given its ‘mail-man’ status. And while the company’s ‘Mail’ business segment is still very important, accounting for slightly more than half of its overall revenue, the company’s also involved in other types of business that are classified under the segment names of Logistics, Retail & e-Commerce, and Others (which refers to commercial property rental operations and other miscellaneous items).

The revenue rise in the reported quarter was due to contributions from acquisitions and growth in e-Commerce related activities across all business segments. Without contributions from acquisitions, revenue increased by only 9.3% year-on-year.

Overall mail revenue for 3Q 2014 grew 12.8% to S$133.2 million, despite a decline in domestic mail volume decline. It’s now the eighth consecutive quarter where the company has seen its mail volume drop.

Meanwhile, revenue for the logistics business grew by 64.5% to S$101.2 million.  In Retail & e-Commerce, revenue decreased by 6.1% to S$22.6 million while rental and property-related income rose by 1.9% to S$11.4 million.

As of 31st December 2013, the firm had S$228 million in total debt and S$363 million in cash. This translates to a net cash position of S$135 million and is a slight step back from a year ago when the company had a net cash position of S$154m.

While SingPost’s reported profits had remained flat, the company managed to achieve a 30.8% year-on-year increase to S$39m in its operating cash flow. With only S$6.3m spent on capital expenditures, the company had managed to bring in S$32.7m in free cash flow.

Dr Wolfgang Baier, Group Chief Executive Officer of SingPost, commented on the quarter’s results: “We are seeing encouraging results from our transformation efforts especially from the new investments as well as new business areas such as e-Commerce and related activities. For the first nine months of FY 2013/14, our revenue mix has shifted quite significantly, with non-mail business contributing 45.7% to Group revenue, up by 10% from a year ago. Overseas revenue has similarly risen by 10% to 27.8% as the Group continues to expand our regional logistics business.”

In the future, SingPost is looking to increase growth in its e-Commerce and logistics businesses, both organically and via investments. It is focused on building end-to-end e-Commerce logistics solutions in the region which involves the company helping to meet customers’ needs in freight, warehousing & fulfillment, last mile delivery & returns and front-end web solutions.

An interim quarterly dividend of 1.25 Singapore cents per share will be paid out, which is unchanged from the dividend declared for the corresponding period a year ago.

Shares of SingPost last changed hands at S$1.34 last Friday and are valued at 20 times trailing earnings with a dividend yield of 4.7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.