MENU

2 Must-See Slides from Singapore Post Limited’s Latest Earnings

In early August this year, Singapore Post Limited (SGX: S08) released its results for the quarter ended 30 June 2016 and held an earnings briefing.

The mail services provider likely needs no introduction, as it should be well-known by Singaporeans. The company organises its business into three major segments: Postal, Logistics and eCommerce.

There were two slides from Singapore Post’s earnings presentation which I thought investors should see.

The Singapore Post network

The first slide shows the eCommerce logistics network that Singapore Post has been able to put together through acquisitions.

2016-10-14-singapore-post
Source: Singapore Post’s earnings presentation

Referring to the slide above, Singapore Post’s chief financial officer Mervyn Lim provided some figures to give context to the Singapore Post eCommerce logistics network:

“Next, I will share some brief highlights on our eCommerce Logistics network development. We have built a network that spans across the markets of USA, Australia, Asia and Europe.

Our global eCommerce Logistics ecosystem includes 19 markets and about 50 fulfilment centres globally. SingPost processes more than S$5 billion of gross merchandise value a year across our eCommerce networks and provide end-to-end eCommerce solutions to more than 100 leading brands.”

There is a good reason why Singapore Post is building out an eCommerce logistics network. Lim explains:

“Domestic mail business remains under pressure with declining volumes but this was offset by growth from International mail volumes. The Group will continue to defend the core postal business, while growing its global end-to-end eCommerce Logistics network.”

Progress has been made in the US as well through its latest acquisitions. Lim highlighted how Singapore Post has secured a foothold in one of the world’s most important eCommerce markets:

“The acquisitions of TradeGlobal and Jagged Peak in the US have provided the Group with a foothold in one of the world’s most important eCommerce markets. The business is highly seasonal and peaks in 4 November and December, leading into Christmas. The Group will maintain a sharp focus on execution over this upcoming period.”

Tough decisions ahead

But the transformation to an eCommerce logistics provider might come with some tough decisions ahead. In particular, Singapore Post is reviewing its dividend policy to ensure that it is sustainable for the long haul, as shown in the slide below.

2016-10-14-singapore-post-outlook-slide
Source: Singapore Post’s earnings presentation

Lim elaborated:

“As SingPost continues its transformation into an eCommerce Logistics enabler, the Group will focus on integration and extracting synergies from its acquisitions. SingPost will be reviewing the dividend policy to ensure there is a clear link to underlying earnings. The dividend must be sustainable through the transformation of the business, and provide for future growth.”

So, what happens next? That’s what we will have to see in the quarters and years ahead.

For more stock analyses and investing tips, you can sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

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.