Singapore Post Limited’s Latest Earnings: What Investors Should Know

Singapore Post Limited (SGX: S08) reported its second-quarter earnings for the fiscal year ending 31 March 2016 (FY15/16) yesterday. The reporting period was for 1 July 2015 to 30 September 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 organised into three major segments: Mail, Logistics and Retail & eCommerce.

You can read more about the company here or catch up with the previous earnings report here .

Financial highlights

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

  1. Overall revenue for the second quarter leapt 19.4% year on year to $263.2 million.
  2. Profit attributable to shareholders came in at $53.5 million, up 38.5% compared to the same quarter a year ago. The profit increase was largely due to one-off gains from the disposals of Novation Solutions and DataPost.
  3. Underlying profit (which adjusts for one-off items) for the second-quarter of FY15/16, though, was down 4.8% year on on year to $37.5 million.
  4. Diluted earnings per share (EPS) saw a 41.9% rise year on year from 1.62 cents in the second-quarter of FY14/15 to 2.30 cents in the reporting quarter.
  5. For the reporting quarter, cash flow from operations came in at a negative $37.3 million with capital expenditure weighing in at $95.1 million. The hefty capex caused the logistics outfit to turn in $132.4 million in negative free cash flow.  
  6. As of 30 September 2015, the group had $326.6 million in cash and equivalents and borrowings of about $238.8 million. This compares with the $683.4 million in cash and equivalents and borrowings of about $235.5 million a year ago.

It has been another quarter of topline growth for Singapore Post. Unfortunately, its underlying profit did not increase in tandem. This bears watching, as my colleague Stanley Lim noted that Singapore Post has not been able to grow its underlying profits at the same rate as its revenue.

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 last 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 recorded $156.1 million in revenue, up a strong 43.3% year on year.

The Retail and eCommerce segment also saw a 7.1% uptick year on year. The Mail segment was the laggard, recording a 5.6% decrease in revenue. Revenue for the Mail segment came in at $116.5 million.

The Logistics segment was again the standout performer in terms of operating profit growth. The Logistics segment registered a 26.2% rise year on year. Furthermore, the Mail segment held up well, despite the fall in revenue, reporting a 2.5% increase in operating profit. The laggard was the Retail & eCommerce segment which experienced a 94.1% fall in operating profit for the reporting quarter.

Dr. Wolfgang Baier, Singapore Post’s Chief Executive Officer, said:

We emerge with a more stable and stronger foundation to our business since the start of our accelerated transformation. It is now showing in the numbers. Group revenue and total profit grew about 20 per cent and 27 per cent respectively. eCommerce logistics continue to deliver strong revenue growth and eCommerce related revenue is now 29 per cent of Group revenue. While overseas revenue grew to 39.5 per cent.

Foolish take away

At its opening price today of $1.89, Singapore Post traded at around 25.1 times trailing earnings with a trailing dividend yield of 3.6%.

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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.