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Strong Performance for Singapore Post Limited in Singapore, Offset By Challenges in U.S.

Yesterday, Singapore Post Limited (SGX: S08), or SingPost, released its third-quarter earnings for the financial year ending 31 March 2019. SingPost is a mail and logistics company organised into four major segments: Postal, Logistics, eCommerce, and Property.

Here, we will look at 10 things investors should take note of in the company’s latest earnings update.

  1. Sales for the quarter increased 6% year on year to S$441.4 million.
  2. Quarterly operating profit declined 8.5% year on year to S$42.2 million.
  3. Net profit for the quarter jumped 15.6% year on year to S$50.2 million. Excluding exceptional items, underlying net profit was down 7.5% to S$32.9 million.
  4. Similarly, earnings per share (EPS) grew to 2.06 Singapore cents this quarter, up from 1.75 Singapore cents in the same quarter last year.
  5. Operating margin percentage weakened from 11.2% in Q3 of last year to 9.6% this quarter.
  6. For the financial year to date, SingPost generated free cash flow of S$73.9 million, down from S$93.6 million last year. Growth was driven by negative working capital changes, offset slightly by a reduction in capital expenditures for the period.
  7. As of 31 December 2018, SingPost’s borrowing stood at S$293.2 million while its cash and bank balances stood at S$345.9 million, giving it a net cash position of S$52.7 million. This was down from a net cash position of S$70.1 million as of 31 March 2018.
  8. All segments posted higher revenue for the quarter. Postal, Logistics, e-Commerce, and Property segment’s revenue grew by 9.0%, 3.6%, 8.7%, and 4.0%, respectively, as compared to the same quarter last year.
  9. The company declared an interim dividend of 0.5 Singapore cents per ordinary share for the quarter.
  10. SingPost provided the following outlook guidance in its earnings release:

“The Post and Parcel business is expected to continue to benefit from the growth in global eCommerce activities. Although domestic letter mail volumes are expected to trend moderately downwards, the Group is integrating its post and parcel last mile delivery capabilities in Singapore to achieve operational synergies and benefits, and to drive more eCommerce-related deliveries on the network. International mail has grown due to cross-border eCommerce deliveries. However, transhipment competition is intense and volumes will continue to come under pressure, especially with higher terminal dues.

Meanwhile, the Property business is expected to remain stable.

The Group continues to face challenges in the eCommerce operating environment in the US due to intensifying competition and rising customer bankruptcies. The US businesses are underperforming and are expected to remain loss-making in the current financial year. In view of this, there is a risk of impairment to the carrying value of the US businesses. Impairments, if any, will be assessed based on the full financial year results and future plans for the 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.