4 Key Takeaways from Singapore Post Limited’s First Quarter Results

Singapore Post Limited (SGX: S08) closed its fiscal year fiscal year ending 31 March 2017 (FY16/17) with minimal sales growth and a substantial decline in underlying profits.

In early August, the logistics provider posted its first quarter earnings. With that in mind, it is a good time to check in with Singapore Post’s results to gain more insights on its progress. I read went through its earnings presentation and earnings transcript and would like to share four key takeaways from the fiscal first quarter.

1. A mixed bag – click here

2. But profit is lagging – click here

3. Free cash flow is back

In our previous article, we talked about the increase in sales and decline in operating profits. Let’s look at free cash flow next.

Source: Singapore Post’s earnings briefing

Singapore Post had lower operating cash flow for the quarter, but posted higher free cash flow as its capital expenditure declined significantly compared to a year ago. Group chief financial officer Mervyn Lim provided insight during the earnings briefing:

“Cash from operating activities was S$58.4 million for Q1 FY2017/18. The Group recorded lower capital expenditure with the completion of the Regional eCommerce Logistics Hub last year.

As such, free cash flow improved to S$32.0 million.”

The improvement in free cash flow is a welcomed sight. However, it would have been better if the improvements were driven by higher operating cash flow instead of lower capital expenditure.

Now, let’s take a quick look at its balance sheet.  

4. A healthier balance sheet

Source: Singapore Post’s earnings briefing

Overall, Singapore Post maintained its cash holdings at about the same level as a year ago, but saw its debt decline by $32.4 million. At the end of June 2017, Singapore Post had a net cash position of $32.7 million.   

Lim was on hand to provide more insights as well:

“Our cash and cash equivalents amount to S$364.4 million as at 30 June 2017. This includes proceeds from Alibaba to be used in accordance with the investment agreements to strengthen the Group’s network.

Borrowings declined to S$331.6 million with partial repayment of bank loans during the quarter. Net cash position improved to S$32.7 million as at 30 June 2017 with repayment of debts during the quarter.

Our interest coverage ratio remains strong at 23.0 times.”

As it stands, there are some positive signs within Singapore Post’s latest results, but overall, it would be hard to say that there are clear signs of revival in its fortunes.

Singapore Post has a healthy coverage in its debt interest, and has the cash to affect more changes should it choose to. Until then, we will have to continue observing the changes in its business and its moves in the future.   

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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.