5 Things Investors Should Know About Singapore Post Limited’s Latest Full Year Earnings

Postal and logistics services provider Singapore Post Limited (SGX: S08) reported its fourth quarter and full year results for its fiscal year ended 31 March 2017 (FY16/17) in the middle of May.

Given Singapore Post’s 12.4% decline in stock price over the last 12 months, I thought it would be useful for investors if I drilled into five useful pieces of information shared in the company’s latest earnings release.

1. The overall result

Here’s a table showing some of the important items from Singapore Post’s income statements for the fourth quarters and whole of FY16/17 and FY15/16:

Source: Singapore Post’s FY16/17 full year earnings press release

Despite a 17.1% increase in revenue for FY16/17, Singapore Post’s underlying net profit was down by 24.7%.

2. Revenue breakdown

The following’s a chart showing a breakdown of Singapore Post’s revenue by its different businesses:

Source: Singapore Post’s FY16/17 full year earnings presentation

Singapore Post has made a concerted effort to grow its e-commerce related business in order to shift from its traditional mainstay of providing postal services.

So far, the company has managed to expand its e-commerce related revenues pretty significantly. It has done so mainly through acquisitions.

3. Changes in operating profit

The chart below plots the changes in Singapore Post’s operating profit from FY15/16 to FY16/17:

Source: Singapore Post’s FY16/17 full year earnings presentation

We can see that all of Singapore Post’s segments reported lower operating profit.

4. TradeGlobal impairment             

The US-based end-to-end eCommerce provider, TradeGlobal ,was acquired by Singapore Post in late 2015 as part of the latter’s transformation plan.

But in its FY16/17 fourth quarter earnings, Singapore Post took an impairment charge of S$185 million on the value of TradeGlobal. This is nearly 80% of the acquisition sum of S$236 million.

The reason for the impairment? TradeGlobal did not live up to Singapore Post’s growth expectations. Instead of a projected profit of S$9.4 million in FY16/17, TradeGlobal incurred a loss of S$25.8 million instead, driven by operational issues and loss of key customers.

5. A lower dividend

Given Singapore Post’s weak financial performance, it is not unreasonable nor surprising to see a decline in the company’s dividend for FY16/17. For the year, the company’s total dividend was 3.5 cents per share, down by half from the 7.0 cents seen a year ago.

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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.