Singapore Post Limited’s Latest Earnings: Here’s What You Should Know After A 20% Jump In Dividends

Singapore Post Limited (SGX: S08) reported its first-quarter earnings for the fiscal year ending 31 March 2016 (FY15/16) this morning. The reporting period was for 1 April 2015 to 30 June 2015.

As a quick introduction, Singapore Post is primarily in the business of providing mail and logistics services. Most Singaporeans should be familiar with the company’s namesake mail service. Its business is currently organized into three major segments: Mail; Logistics; and Retail & eCommerce.

You can read more about the company here or catch up with its last quarter’s earnings report here.

Financial highlights

The following’s a quick take on Singapore Post’s latest financial figures:

  1. Overall revenue for the first-quarter leapt 20.7% year-on-year to $254.6 million.
  2. Following suit, profit attributable to shareholders came in at $46.6 million, up 15.8% compared to the same quarter a year ago.
  3. Underlying profit (which adjusts for one-off items) for the first-quarter of FY15/16 was up 8% year-on-year to $40.3 million.
  4. Meanwhile, diluted earnings per share (EPS) for the first-quarter only saw a 4.2% rise from 1.905 cents in the first-quarter of FY14/15 to 1.985 cents in the reporting quarter.
  5. For the reporting quarter, cash flow from operations came in at $59.2 million with capital expenditures clocking in at $75.6 million. The higher capex caused the logistics outfit to turn in $16.4 million in negative free cash flow. For perspective, the selfsame figures were S$51.3 million, S$9.9 million, and S$41.4 million, respectively, a year ago.
  6. As of 30 June 2015, Singapore Post had $565.9 million in cash and equivalents and borrowings of about $236.9 million.

In all, it was another quarter of good revenue growth for Singapore Post. That said, the gain in its underlying profit was more modest when compared to the revenue increase.

As my colleague Stanley Lim has noted before, Singapore Post has not been able to grow its underlying profits at the same rate as its revenue. This trend certainly bears watching as the company navigates past its stagnating legacy mail business.

An interim dividend of 1.5 cents per share for the quarter was also recommended by Singapore Post’s board of directors. This represents a nice 20% increase from the dividend seen in the same quarter in the previous fiscal year. The firm has projected a full year dividend of 7 cents per share for FY15/16.

Operational highlights

The majority of Singapore Post’s revenue gain for the first-quarter of FY15/16 came from its Logistics business segment. The segment had recorded $140.1 million in revenue, up 43.6% year-on-year.

The Retail and eCommerce segment also contributed its share with a 5.6% uptick in revenue compared to a year ago. The Mail segment though, was the real laggard as it continued to move at a snail’s pace (pun intended) with a 1.6% increase in revenue to $125.1 million.

Notably, revenue for Singapore Post’s Logistics segment had exceeded its mail segment for the reporting quarter – this signifies the shift in focus for the company.

Operating profit for the Logistics segment saw a great 74.6% year-on-year jump. Elsewhere, the Mail segment had reported a good 10.9% uptick in operating profit as well.

Dr. Wolfgang Baier, Singapore Post’s Chief Executive Officer, had the following comments for the recent quarter:

“We have a set of numbers that demonstrates the progress we are making in the transformation of SingPost. This Quarter, our revenue and net profits are our highest ever. The partnerships we have built and the M&As [mergers and acquisitions] we have done are showing in our numbers. We are adding one or two major eCommerce customers each month.

Just three weeks ago, we announced that we have a new arrangement with Alibaba to create an end-to-end logistics platform around our reorganized subsidiary Quantium Solutions International. We will embark on a joint strategic business development framework with Alibaba and they are increasing their equity in us from 10.23 per cent to 14.51 per cent”

Foolish take away

At its opening price today of $1.91, Singapore Post traded at around 28 times its trailing earnings and has a forward yield of 3.7% based on its dividend-forecast.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.