What Investors Should Know About Singapore Post Limited’s Logistics Business

Singapore Post Limited (SGX: S08), or SingPost, is a mail and logistics company, organised into three major segments of Mail/Postal, Logistics, and Retail & eCommerce.

The company has recently reported its second quarter result for the year ended June 2018 (2Q FY17/18). In this article, we will share a few points about the latest performance of the Logistics business.

Source: SingPost 2Q FY17/18 Result Presentation

From the above, we can see that SingPost categorises its Logistics business into five areas, namely, Quantium Solutions, Couriers Please, SP Parcels, Famous and Others.

Overall, as compared to last year, this segment delivered growth in quarterly revenue. Yet, operating profit fell from a positive $5 million to a negative of $4.2 million.

Breaking down further, we can see that all businesses within Logistics segment grew quarterly revenue on a year-on-year basis, with the exception of Quantium Solutions. The latter faced competitive pressures in its Hong Kong operation which negated improved performance in its Singapore operation.

Revenue growth of SP Parcels, Couriers Please and Famous Holdings were driven mainly by the higher last-mile eCommerce deliveries across Singapore and Australia, as well as higher freight forwarding volumes.

In terms of operating profit, the loss was mainly due to weakness in Quantium Solutions, which resulted in lower profitability and also doubtful debt provision for a key customer in Hong Kong. It also reflected costs from planned investments such as the Regional eCommerce Logistics Hub.

In sum, with the exception of Quantium Solutions, the Logistics segment delivered improved performance across the board.

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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.