SINGAPORE (Nov 4): Singapore Post (SingPost) saw its earnings jump 10.3% to $27.7 million for the 2Q19/20 ended September, from $25.1 million a year ago.

However, the better performance was led by the absence of a $2.9 million fair value loss on warrants from an associated company incurred last year.

Excluding the impact of exceptional items, underlying net profit slipped 4.6% to $26.8 million for 2Q19/20, on the back of a drop in earnings from the Post and Parcel segment and freight forwarding business.

Revenue for the quarter rose 2% to S$324.4 million, led by higher International post and parcel revenue arising from cross-border e-commerce deliveries

This was partially offset by a decline in Domestic post and parcel revenue, which is accelerated by a sharp reduction in both business letter volumes and advertising mail, and a drop in freight forwarding revenue as a result of lower volumes from the slowdown in global trade.

SingPost registered a $0.3 million gain in 2Q19/20 from its share of profit of associated companies and joint venture, compared to a share of loss amounting to $3.6 million recorded a year ago.

The group in September announced that its US e-commerce subsidiaries – Jagged Peak and TradeGlobal – filed for voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code.

Following the announcement, SingPost has since deconsolidated their financials from the rest of the group, and will no longer recognise profit or loss from the US subsidiaries.

See: SingPost's US e-commerce units seek bankruptcy protection

As at end-September, cash and cash equivalents stood at $325.4 million.

The board has declared an interim dividend of 0.5 cent per share for 2Q19/20, unchanged from a year ago. The interim dividend will be paid on Nov 29.

“Domestic letter mail volume continues to decline while e-commerce-related package volume continues to grow, leading to the overall lower blended margins of our financial performance, partly offset by our cost leadership programme,” says Paul Coutts, group CEO.

“To further mitigate the impact of this trend, we have recently announced a streamlining of domestic postal products and an increase in international mail rates that will come into effect from Dec 2, 2019,” he adds.

SingPost last week announced a number of revisions to its existing services.

These included the replacement of its ordinary mail category with a new basic mail service that will only accept letters and printed papers that weigh up to 500g. Postage rates for these will remain the same at between 30 cents and $1.70, depending on the weight and size.

All other items, including merchandise and items between 501g and 2kg, will be categorised under Basic Package.

It is also making changes to its Registered Article Service in Singapore, which will be renamed as Registered Service (Singapore). This optional sign-for service will only accept letters and printed papers up to 500g.

Airmail rates for letters, printed papers and postcards will also increase by 20 cents for deliveries to Malaysia and Brunei, and by 10 cents to all other countries.

The Registered Service (International) fee will also be revised to $3.60, up from the current $2.50, in addition to the applicable postage fees.

See: SingPost's service adjustments 'steps in the right direction', but headwinds remain: DBS

“SingPost remains optimistic in the actions we are taking to reposition ourselves for the future. These initiatives, such as our Smart Letterbox system, will undoubtedly transform Singapore’s postal landscape and position us for the future,” Coutts says.

As at 11.44am, shares in SingPost are trading flat at 96.5 cents.