POS Malaysia, country’s leading postage and parcel company, had reported a decline of 86% of the profit of the company. Its shares fell over 6% on Wednesday. The losses were traced back to the mail and impairment charges of RM 39.6 mil, levied on the logistics company.
Postal services are seeing their worst quarterly loss in the last 3 years. The international segment has fallen into the red, after losing a major customer base in China and the quantum of the contributions from the other segments was too insignificant to leave a dent. The international segment of POS Malaysia had also been slipping as foreign customers switched to regional options that were cheaper.
The group’s share price declined to a one-year low of RM1.58 today, giving it an RM1.24 billion market capitalization. POS Malaysia’s revenue for this year has declined 4.75% that is it has reduced to RM2.36 billion from RM2.47 billion. The continued weak mail, international and logistics business performance at POS Malaysia and POS Logistics, keeps adding to its miseries.
“The losses from mail is a result of a continuing double-digit contraction in mail volume and bill payments, reflecting the increasing substitution of letters with electronic media.The impairment of goodwill in POS Logistics is a result of a performance that was below expectations due to competitive market conditions” the group said in a statement.
The continued decline in the mail volume is expected to cause further loss to the company. The logistics segment off-late has been generating little revenue. POS Malaysia thus needs to make significant changes into its digital segment and strengthen its capability to serve the growing demand for e-commerce.
“We are working closely with regulators for an overall (postal) tariff re-balancing to update the tariff, which was last changed in 2010. We intend to reflect the growing costs to serve the nation with an increase of 17% new postal addresses. We expect a positive outcome from the regulators on the tariff re-balancing,” said POS Malaysia’s group chief executive officer Syed Najib Syed Md Noor.
POS, in general, faces the dual problems of cost inefficiency for its postal segment and structural issues that challenge efforts to boost earnings from the courier segment. They cut earnings to account for a controlled decline for the former and a less bullish outlook for the latter.
It would be safe to say that there is too much pressure on the courier segment to keep things afloat. This segment has successfully kept the momentum for the past three quarters and margins have fortified, but the group’s underperforming segments have worsened over the same period.