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

Two weeks ago, 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 a previous article, I had discussed the eCommerce segment. In this article, will be running through the Logistics segment. (I will be covering the Postal segment in a future article.) [Editor’s note: The article on the Postal segment has been published. It can be found 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 Logistics segment delivered marginal growth in revenue, but experienced a huge increase in operating profit, which more than doubled.

The Logistics segment’s revenue growth was driven mainly by higher last-mile eCommerce delivery volumes in Singapore and Australia for SP Parcels and Couriers Please, respectively. Higher freight forwarding volumes for Famous Group also played a role. Qunatium Solutions was a drag on the Logistics segment’s top line, as it had faced competitive pressures in its Hong Kong operations.

The huge jump in the operating profit of the Logistics segment was driven by stronger performances in the SP Parcels, Couriers Please, and Famous Group businesses. Growth in last mile delivery volumes for SP Parcels, higher parcel sorting utilisation levels, and stronger warehousing and fulfilment activities were factors that contributed towards the growth.

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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.