SingPost FY profit surges: S$78.3M doubled with property revaluation

SingPost's FY2024 earnings hit S$78.3M, soaring 217.4% y-o-y, driven by a S$36.8M property revaluation gain. CEO's confidence in ongoing transformation echoes as the group unveils five key strategies from March's strategic review.

Yee Loon10 May 2024

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SINGAPORE: Singapore Post (SingPost) saw a significant surge in its earnings for the fiscal year ending on 31 March, primarily attributed to an exceptional gain of S$36.8 million from property revaluation.

In a statement released on Friday (10 May), SingPost disclosed that its full-year net profit skyrocketed by 217.4% to S$78.3 million, a substantial increase from S$24.7 million in FY2023.

Underlying net profit also experienced a notable increase, climbing 28.1% to S$41.5 million from S$32.4 million in the previous year.

The company's board has recommended a final dividend of 0.56 cents per share, complementing the interim dividend of 0.18 cents per share distributed in November 2023.

This proposed dividend would raise the Singapore-listed postal and logistics group's total dividend to 0.74 cents per share, marking a 28% increase from the previous year and constituting 40% of its underlying net profit.

Vincent Phang, the CEO of SingPost Group, expressed satisfaction with the ongoing transformation efforts, stating, “Our transformation continues to yield results in our core businesses as we execute our strategy.”

Furthermore, the net profit for the second half of the fiscal year surged by 93.4% to S$66.9 million from S$34.6 million in the preceding year, driven by the property revaluation.

In the second half, revenue declined by 5.9% to 859.5 million, primarily due to reduced sea freight revenues.

Breaking down its full-year performance, the group witnessed a 9.9% decline in revenue to $1.69 billion, mainly driven by lower sea freight revenues.

By segment, logistics revenues decreased by 11.4% to $1.17 billion, with operating profit dropping by 20.4% to $67.4 million.

In Australia, comprising FMH and CouriersPlease, revenue experienced a 6.3% increase to A$921.3 million (S$824 million), while operating profit slightly rose by 1.6% to A$63.2 million.

SingPost noted, "The continued growth in the Australia business was underpinned by new customer acquisitions and volume growth, despite challenging market conditions. "

The operations of Quantium Solutions have been re-engineered as part of the new International business segment. Besides driving operational efficiency, SingPost said low-yielding warehousing contracts were phased out, resulting in improved performance.

Conversely, its freight forwarding business witnessed declines in both revenue and operating profits, which SingPost attributed to an "industry-wide contraction in sea freight rates and volumes post-pandemic.

Freight forwarding revenue plummeted by 43.5% to $263.1 million, with operating profit experiencing a significant decline of 48.4% to $22.4 million.

Concurrently, the post and parcel business recorded a decrease in revenue for both local and international operations, dropping by 2% to S$514.1 million.

However, on a positive note, the segment's operating profits rebounded to achieve a profit of S$7.5 million from the loss of S$12 million in 2023, primarily driven by its International business.

The segment's domestic operations were bolstered by increased revenue from an 11% growth in eCommerce volumes and the postage rate adjustment in October 2023, which helped offset the ongoing decline in volumes of letter mail and printed papers.

Regarding property operations, revenue slightly increased by 1.4% to S$77.7 million for the full year, with operating profit rising by approximately 5% to S$42.2 million, attributed to positive rental reversions at SingPost Centre.

"Overall occupancy at SingPost Centre was 96.2% compared to 98.2% as at 31 March 2023, with the occupancy for the retail mall and office space running at 99.6% and 94.8% respectively," the statement noted.

SingPost announced its five key growth strategies in March

In March, SingPost announced the completion of its strategic review and unveiled five key growth strategies set to unfold over the next three years.

Primarily, the group will undergo a restructuring into three distinct business units: Singapore, Australia, and International.

Subsequently, the group aims for each business unit to yield returns surpassing the cost of capital.

To achieve this objective, a catalogue of non-core assets and businesses, including select properties and diverse international holdings, has been earmarked for potential monetization to facilitate capital replenishment.

SingPost further commits to distributing 30 to 50 per cent of its underlying net profit from FY2024 to FY2025.

The group also committed to the revitalization of urban logistics and delivery services in Singapore, the attainment of operational scale in Australia, and leveraging its asset-light model and fourth-party logistics platform to cater to cross-border clientele.