The Good And Bad That Investors Should Know About Singapore Post Limited’s Latest Quarterly Earnings

Singapore Post Limited (SGX: S08) is a mail and logistics services provider. It organises its business into three operational segments: Postal, Logistics, and eCommerce.

In mid-November, the company reported its second quarter results for its fiscal year ending 30 June 2018 (FY17/18). There are both positive and negative takeaways that investors may want to learn about. But first, let’s run through the company’s numbers.

The results

Here’s a condensed income statement from Singapore Post for the second quarter of FY17/18:

Source Singapore Post FY17/18 second quarter earnings press release

We can see that Singapore Post delivered mixed results for the reporting quarter. There was double-digit growth in revenue, but net profit fell.

The positives

Firstly, the company’s revenue was higher compared to a year ago, as mentioned earlier. This was driven primarily by stronger revenue in the Postal and Logistics segments. The eCommerce segment was the laggard as it delivered flat revenue compared to the second quarter of FY16/17.

Secondly, the Postal segment increased its operating profit by 5.3% year-on-year to S$35.1 million, due to growth in the International Mail sub-segment.

Thirdly, Singapore Post improved its balance sheet. The company reported a decline in total borrowings from S$406.4 million a year ago to S$306.9 million as of 30 September 2017; meanwhile, the amount of cash increased from S$158.0 million to S$282.3 million.

Lastly, Singapore Post appears to be making progress in its turnaround-plan for its troubled subsidiary, TradeGlobal, which belongs to the eCommerce business segment. In the second quarter of FY17/18, the eCommerce segment saw its operating loss narrow from S$6.8 million a year ago to S$2.9 million.

The negatives

Firstly, the Postal segment was the only one that delivered positive operating profit in the reporting quarter.

Secondly, Singapore Post’s operating cash flow was a negative S$7.9 million in the second quarter of FY17/18. In comparison, the company generated positive operating cash flow of S$21.3 million a year ago.

Thirdly, the company’s operating margin declined from 11.8% in the second quarter of FY16/17 to 8.4% in the reporting quarter. The lower operating margin was due to higher expenses and a lack of a one-off gain.

Lastly, the interim dividend per share declared was halved from 1.0 cent in the same quarter a year ago, to 0.5 cents.

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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.