Customers are migrating towards electronic statements and bills.
Singapore Post's (SingPost) domestic mail revenue is seen to fall by 5-8% per annum over 2018 to 2020 due to continued migration towards electronic statements and bills, whilst international mail grows 15-37% per annum over the same period.
According to CIMB Research, the firm faced higher international settlement rates following policy changes by the Universal Postal Union. International carriers had to pay higher rates to land mail in the country which started in 2010 when Singapore was reclassified as “New Target Country” by the UPU as part of changes in the terminal dues system.
The company subsequently raised its postage rates for both domestic and international mail in October 2014 to cope with cost increases, which led to a slower decline of postal operating margin (OPM) in the years after.
Singapore Business Review previously reported that SingPost raised its postage rates for international small packets. The changes were implemented on 2 January 2018.
CIMB measured the potential impact of terminal dues on SingPost’s postal segment and found that for every 1% decline in the OPM of the postal segment, its revenue has to grow by around4% to maintain its operating profit level.
In other words, operating profit will be lowered by 4% for every 1% decrease in OPM, assuming revenue forecasts are unchanged.
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