3 Things Investors Should Know About Singapore Post Limited’s Latest First Quarter Earnings

Singapore Post Limited (SGX: S08) is a company that’s likely to be familiar to many in Singapore given that it runs the nation’s postal services. But there’s more to Singapore Post – it also provides eCommerce-related logistics services and has its own retail mall.

In early August, Singapore Post reported its first quarter earnings for its fiscal year ending 31 March 2018 (FY2018). The reporting period was from 1 April 2017 to 30 June 2017. Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from Singapore Post’s income statement for the first quarters of FY2018 and FY2017:

Source: Singapore Post FY2018 first quarter earnings announcement

We can see that Singapore Post’s underlying net profit had fallen by 24.7% year-on-year, despite revenue growing by 6.2%.

The decline in underlying profit was due to “decline in domestic mail volume, costs from planned investments, increased competition in logistics segment, and expansion costs of associates.“

2. Segmental results

The table below shows the changes in the operating profits for Singapore Post’s various business segments in the first quarter of FY2018:

Source: Singapore Post FY2018 first quarter earnings announcement

All of Singapore Post’s segments reported year-on-year declines in operating profit.

The Postal segment suffered from lower domestic letter mail volumes, while the Logistics segment was impacted by an increase in competition and costs from planned investments. The much higher exceptional items was due to fair value gains on warrants that Singapore Post owns.

3. Sequential change in balance sheet strength

In the table below, you can see how a few important numbers regarding Singapore Post’s balance sheet strength have changed sequentially:

Source: Singapore Post FY2018 first quarter earnings presentation

Singapore Post’s balance sheet improved significantly from the fourth quarter of FY2017. This can be seen from (1) the net-cash position growing from just S$2.6 million to S$32.7 million, and (2) the EBITDA to interest expense ratio jumping from 13.3 to 23.0.

The company’s strong balance sheet provides the necessary resources for it to turnaround its business, a process which may last for a number of 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.