Why Are Singapore Telecommunications Limited’s Revenue And Profit Down Over The Last Five Years?

Over its last five completed fiscal years, Singapore Telecommunications Limited (SGX: Z74) has reported declines in its results.

The table below shows this:

Source: Singtel’s annual report

From its FY2012 (fiscal year ended 31 March 2012) to FY2016, Singtel’s operating revenue has dipped by 9.9% from S$18.83 billion to S$16.96 billion. What’s more, its Group EBIDTA (earnings before interest, taxes, depreciation, and amortisation) is down by 3.9% to S$5.01 billion while its net profit after tax has declined by 3.0% to S$3.87 billion.

Understanding the story behind the numbers

From the numbers above, we know that Singtel has been delivering a weaker financial performance over the past few years. But we can gain more insight by digging deeper. Just why did Singtel’s numbers decline from FY2012 to FY2016?

Thing is, if Singtel’s financials were displayed in constant currency terms, there would have been an upward trend. What’s masking the improvement is mainly the movement of the Australian dollar against the Singapore dollar.

The table above shows that the Australian dollar has depreciated by about 22% against the Singapore dollar from Singtel’s FY2012 to FY2016. So, the numbers from Optus (Otpus is Singtel’s Australian telco) have appeared weaker when reported in the Singapore dollar even though there was decent growth in Australian dollar terms.

A Foolish takeaway

When investing, it is important that we dig beyond the surface and understand the story behind the numbers.

Doing so will help us see the real signal – business performance – which might be masked at times by noise such as foreign exchange movement, financial engineering, and special one off events.

Coming back to Singtel, the real signal is that the company’s business performance has actually improved over its last five fiscal years.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.