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Singapore Post Limited’s Latest Earnings: An Overview Of The eCommerce Business

Last week, Singapore Post Limited (SGX: S08) released its fourth quarter and full year earnings update for its fiscal year ended 31 March 2018 (FY17/18).

As a quick introduction, Singapore Post is a mail and logistics services provider. It organises its business into three main segments: Postal, Logistics, and eCommerce. Given that the company has three different businesses, I thought it would be useful to have a look at the performance of the individual segments.

In this article, I will be running through the eCommerce segment. (I will be covering the other segments in future articles.) [Editor’s note: Articles discussing the Logistics and Postal segments have been published. They can be found here and here.]

The financial performance

The table below shows the revenue, operating profit, and operating margin for the segment for the fourth quarter of FY17/18. It also shows the revenue breakdown for the segment according to its different businesses:

 
Source: Singapre Post’s FY17/18 fourth quarter earnings presentation

We can see that the eCommerce segment had experienced strong growth in revenue of 15.7% during the reporting quarter. And although the business did not manage to make an operating profit, its operating loss had narrowed from S$15.1 million a year ago to S$5.8 million.

The eCommerce segment’s  revenue growth was driven mainly by the addition of a new customer at TradeGlobal. This is pretty impressive, considering that Trade Global had lost two large customers in the second quarter of FY17/18. TradeGlobal’s revenue growth and good cost controls, in particular over its peak period, had helped the eCommerce segment narrow its operating loss.

What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near- to long-term performance of our investments’ businesses.

With regard to Singapore Post, this is what the company said about the future of its eCommerce segment in its latest earnings update:

“The Group is well-positioned to benefit from the strong growth in global eCommerce and last-mile deliveries. The Group expects to further benefit from the integration of its eCommerce businesses.”

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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.