Singapore Post Ltd (SingPost) has published the results of a strategic review which aimed to “enhance shareholder returns and ensure the Group is appropriately valued”.
The review, which began in May 2023 and was conducted by financial advisor Merrill Lynch (Singapore) Pte. Ltd (BofA Securities), revealed how the group has transformed from a postal organization to a technology-driven international logistics enterprise, underpinned by a ‘disciplined and systematic’ acquisition approach since 2020.
SingPost has successfully built a profitable business in Australia, and revenues generated overseas now contribute more than 85% of both total group revenue and operating profit.
In the last year, the group has also taken steps to address the structural decline of letter mail including a postage rate adjustment in October 2023 which saw the postal segment return to profitability in the third quarter ended December 31, 2023.
Vincent Phang, group chief executive officer of SingPost, said, “We have progressively transformed from a traditional postal organization to a logistics enterprise and are well positioned to leverage e-commerce logistics growth trends to scale our businesses. We are focused on executing our strategic thrusts to create market leadership, orientate to growth and generate shareholder value.”
Strategic objectives
The board has approved five strategic thrusts for the group to be executed over the next three years:
- Reorganization of the group: The group will be reorganized into three business units of Singapore, Australia and International. Each business unit will have the agility and empowerment to operate in its own markets, to develop market leadership and build on its core capabilities according to its individual strategies.
- Strategic management of capital: The group will continue to actively manage its capital deployed in its portfolio of businesses with regular reviews of the financial performance and returns against set targets. The target for each business unit is to generate a spread above the cost of capital.
- Transforming urban logistics and deliveries in Singapore: The focus of the Singapore business unit is to be the country’s market leader in deliveries, building on the core capability and strength of the postal network to capture the growth of e-commerce logistics, innovating and transforming Singapore’s urban logistics landscape. The group will continue to re-engineer this network to be best-in-class in service, efficiency and sustainability.
- Achieving scale in Australia: The Australia business unit will leverage the asset-light hybrid 4PL and 3PL capabilities and strengthen its position as one of the top five logistics companies in Australia. The group will explore near-term partnerships that contribute to growth, provide equity to deleverage acquisition debt and establish an independent valuation benchmark. The group will continue to pursue appropriate M&A opportunities and seek future liquidity options to maximize value.
- Building tech-driven excellence to serve cross-border customers: The international business unit will focus on serving the group’s cross-border e-commerce customers through an asset-light model and its 4PL platform, ARRIV. This was launched in the last quarter of 2023 to enhance customer experience, strengthen its partnership network, and achieve operational excellence in international connectivity. The group will explore options across key geographies to further enhance the e-commerce supply chain network, expanding the hubs in Singapore, Hong Kong and Europe.
For the full details of the SingPost strategic review, click here.
Read an exclusive interview with Li Yu, CEO – International at SingPost, in the March 2024 issue of Parcel and Postal Technology International magazine.