For the year ended 31 March 2017, Pos Malaysia registered a commendable 21.2% or RM364.8 million hike in revenue to touch RM2.1 billion, our highest annual revenue to date. This came on the back of higher contributions from our Courier business as well as the inclusion of six months revenue amounting to RM327.6 million from our newly absorbed Logistics and Aviation services businesses under the Pos Aviation Group.
Despite the intense competition in the courier market, our Courier business, Pos Laju, grew its revenue by 22.5%. The surge in revenue was generated from the On Demand and Contract Customer segments that increased by 27.1% (RM40.5 million) and 46.2% (RM81.4 million) respectively as a result of higher demand from online businesses and encouraging sales from promotional campaigns.
However, the Group’s performance was offset by lower contributions from our Postal Services and International businesses. Within our Postal Services, the Retail business saw its revenue decrease as a result of lower transactions volume across the Group’s post offices.
For the year in review, the Group registered a healthy 33.1% hike in profit after tax (“PAT”) to RM84.0 million against PAT of RM63.1 million in FY2016. The higher profitability mainly came on the back of higher profit contributions from the Courier business along with our more disciplined cost management initiatives.
The Group chalked up higher cost of sales against the previous year due to higher staff costs, vehicle rental and communications charges plus higher costs related to the acquisition of the Pos Aviation Group. The higher staff costs came on the back of additional manpower requirements in the Courier business to cater for higher volume growth; the higher vehicle rental costs were due to several van leases; while the higher communication charges were primarily due to higher wide area network charges. The inclusion of the Logistics and Aviation businesses into our stable of businesses in the second half of the year and the corresponding costs, resulted in higher overall expenditure for the Group.
Administrative expenses rose, in particular due to the increase in other operating expenses including approved donations for corporate social responsibility programmes. The SCORE 2.0 Transformation Plan that was launched during the financial year also contributed to the increase in manpower and computer equipment costs. In addition, we also incurred additional costs of RM3.0 million arising from the acquisition of the Pos Aviation Group.
Other income was higher against the previous year by RM24.9 million mainly due to the gain on fair value adjustment of RM3.8 million, gain of disposal of property, plant and equipment of RM7.4 million and reversal of litigation expenses of RM4.0 million. Our finance costswere higher by RM4.8 million due to financing interest charges at Pos Logistics Berhad and Pos Ar-Rahnu Sdn Bhd. The effective tax rate for FY2017 was higher due to certain expenses (mainly depreciation and amortisation) not allowed for tax deduction. However, we have initiated a number of measures to be more tax-efficient that should result in better PAT margins going forward.
To mitigate further increases in operating expenses, we will continue with our disciplined approach towards managing our workforce size going forward. We will also leverage on our expanded handling capacity to make the most of new growth opportunities.
To contain margin compression, we will continue to focus our efforts on strengthening the efficiency of our existing postal infrastructure. To date measures such as optimising the last mile delivery infrastructure for both mail and small courier items, as well as setting up regional processing centres including some in East Malaysia to shorten delivery time, have proven fruitful. We will step up our efforts in these areas as well as tap technological platforms in a more innovative manner to meet the evolving demands of a digitally-savvy marketplace.
As we maintain a laser-focused approach on these cost management measures and other initiatives, we are confident of securing the Group’s long-term commercial viability and sustainability.
The Group’s liquidity position remained positive as the Group’s cash and cash equivalents (exclusive of collections on behalf of agency payables, money order and postal order payables) increased to RM742.4 million as at 31 March 2017 from RM576.7 million as at 31 March 2016. The Group’s gearing ratio (defined as total debt over total shareholders’ equity less goodwill) stood at 0.16 time as at 31 March 2017 as compared to 0.09 time as at the previous financial year-end pursuant to the inclusion of Pos Aviation Group’s debt liabilities. The Group had no contingent liabilities as at 31 March 2017.
The Group’s objectives in managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with regulatory requirements. The Group’s total capital commitments authorised for property, plant and equipment amounted to RM343.3 million as at 31 March 2017, of which RM324.3 million of capital expenditure had been contracted for, but not incurred. The remaining capital expenditure of RM19.0 million has not been contracted for. The approved and contracted amount for capital commitments mainly relates to PNSL (a subsidiary of Pos Logisitcs), on the acquisition of vessels amounting to RM164.0 million in relation to the bulk coal transportation project with TNB Fuel Sdn Bhd. The remaining balance relates to commitments for structure and renovation, plant and machinery, computer peripherals, purchase of motor vehicles, warehouse rectification, etc.
2.3 INDUSTRY ANALYSIS
Currently for its courier section, PosLaju is facing competition from private courier companies such as FedEx, TNT, DHL, SkyNet and many more. Poslaju also will compete with other courier companies such as GD Express Bhd , Nationwide Express Courier Services Bhd that have build in Malaysia. These companies have a highest technology use in their operation compared to the Poslaju. With this highest technology, it will meet the requirement for fast,efficient and reliable service for the speedy transfer of light-weight and high value goods between locations. These private companies also can deliver the item to all over the worldcompared to Poslaju that only can deliver the item at certain overseas country. Not all overseas country Poslaju can post the customers’ parcel or document.
However, PosLaju is now undoubted leading courier and express mail service provider in the country. Poslaju still become a main choice by the customer due to its lower pricing and wide accessibility of counters and branches across the country. For domestic courier services fornext day arrival (D+1), PosLaju charges between RM3.50-RM7.00 for the first 500 gram, as compared to private courier companies that charge between RM15-RM60 for the same parceland delivery time. Poslaju can deliver documents or parcels at rural area without having difficulties. The parcel will be delivered on time as customer want. . Sometimes the private courier companies also need help from Poslaju to deliver their item to rural area that they cannot reached due to transportation and geographical problem. Our valued customers give a high level of confidence and trust on our courier services.
So here’s one of the company that compete with PosLaju which is Skynet Worldwide (M) Sdn Bhd. Skynet Worldwide (M) Sdn Bhd. is proud to be one of the leading domestic courier companies with current the complete network located strategically in both Peninsular and East Malaysia.
Skynet has been in Malaysia for more than 15 years and currently owns and operates an extensive network of 59 offices and 23 points of access with staff strength of more than 1000 people and 546 vehicles on the road and many air routes to and from East Malaysia and international destinations. Forming strategic alliances with DPEX Worldwide Pte. Ltd. they has competitive advantage in developing in international market not just regionally; it enables for they to provide Fast, Accurate, Reliable express service to they clients everywhere on earth.
they provide next-day service, our core business, to they customers in all major and small towns. Thousands of documents and parcels move through our network system daily and arrive at consignee the very next day.
HQ Skynet Worldwide (M) Sdn Bhd is strategically located in Petaling Jaya. they do the deliver the highest number of consignments in Klang Valley day in and day out for there stations as well as picking up the most consignments to send to their network for deliveries throughout Malaysia. On average, they do deliver and pick up 9000 consignments daily.
HQ in Petaling Jaya also serves as a hub for the network shipment. It transits and sorts all shipments from the entire network. they operate a road and air line-haul system daily in order for they to move all the consignments. Currently, they are running 18 routes of road line-hauls, besides Klang Valley line-hauls, whereas all trucks coming from stations to HQ carrying shipments for all stations and going back to stations with shipments meant for their deliveries. With 13 air line-hauls mainly to and from East Malaysia are in place to ensure the “next day” service. There are three international-bound air line-haul for all international shipments to Singapore and the rest of the world.
GD Express Carrier Bhd, an investment holding company, provides express delivery services in Malaysia and Singapore. The company operates in two segments, Express Delivery and Logistics. It offers domestic express carrier services, including next day delivery, same day delivery, diplomatic, bulk, reverse charge, delivery order return, standard pick-up, late pick-up, cash on delivery, and early delivery services. The company provides international delivery and freight services comprising heavy and bulk shipments. It also offers customized logistics solutions that include security, mailroom, and project handling services; warehouse and distribution services; and liability coverage services for businesses and individuals. In addition, the company provides prepaid products; rental of computer equipment; and provision of facilities and assets management services, as well as insurance services. As of June 30, 2017, it had a fleet of 831 trucks and vans. The company was founded in 1997 and is headquartered in Petaling Jaya, Malaysia.
A couple of things make GD Express Carrier Bhd(GDex) stand out from local competitors Pos Malaysia Bhd, Nationwide Express Courier Services Bhd and City-Link Express (M) Sdn Bhd.To begin with, GDex is the youngest courier service company, having started operations only in 1997. Comparatively, Malaysians can trace Pos Malaysia’s history back to the 1800s, while Nationwide Express was formed in the mid-1980s and City-Link was set up towards the end of the 1970s.
Despite being the youngest of the lot, GDex has become a RM2.3bil market capitalisation company, while Pos Malaysia trails with over RM1bil behind and Nationwide Express is around RM45mil. City-Link is not listed although it had previously expressed intentions to list on Bursa Malaysia’s Main Market.One difference about GDex is the passion and commitment from its major shareholder Teong Teck Lean, who saw potential in the company despite its earlier loss-making years.
Meanwhile, Nationwide Express has a total of 180 networks comprising branches and agents all over Malaysia, Singapore, Brunei, Thailand and Saudi Arabia. Headquartered in Shah Alam, it handles more than 50,000 packages a day while its full capacity is up to 70,000 packages a day.It recently recorded a net loss of RM690,000 for the second quarter ended Sept 30, 2015, while there was a slight dip in revenue to RM22.8mil from RM23.67mil a year ago.
This was mainly due to lower revenue from its courier and other segments. The courier segment saw a decrease due to the lower volume of consignments, while for the logistics and other segments, freight volume handled was lower.For Pos Malaysia’s latest quarterly results, the group posted close to a 90% year-on-year dip in net profit to RM3.5mil in the second quarter ended Sept 30, 2015, dragged down by a lower contribution from the retail; and digital certificates and printing businesses.
Revenue was 7% higher at RM398.8mil against RM371.67mil in the same quarter a year ago.Its courier segment is the second-highest contributor to the group’s revenue, while the mail segment still dominates.The company is looking at an earnings growth of 15% to 25% per year, banking on its courier services. City-Link said it has an annual turnover of more than RM300mil.
Apart from Malaysia, it has operations in Singapore, Thailand, Indonesia, Vietnam, Hong Kong and China. The company’s management earlier said it will use the proceeds from the future listing exercise to invest in technology and infrastructure to serve its customers better.It commands a 13% market share of the domestic courier service in Malaysia.The fortunes of GDex are on the rise.
For the first quarter ended Sept 30, 2015, GDex saw net profits grow to RM6.29mil against RM4.98mil a year ago due to higher volume in the e-commerce business. Revenue grew 17.7% during the period to RM51.47mil from RM43.74mil last year.A notable point is that GDex has so far managed to attract the attention of two international investors, namely, Singapore Post Ltd and Japan-based Yamato Holdings Ltd. Together, they hold a 34% stake in the company, while GDex’s head honcho Teong still has the majority at 35.39%.