e-commerce boom propels Pos Laju to be main contributor for the postal services group
PETALING JAYA: Not wanting to be left behind by the e-commerce boom, Pos Malaysia Bhd is counting on its courier services to be the main driver of growth within the next two years.
At the moment, the revenue generated from the traditional mail and courier services of Pos Laju is even.
According to group chief executive officer Datuk Mohd Shukrie Mohd Salleh, its Pos Laju service would be its main revenue generator by its next financial year ending March 31, 2018 (FY18), driven by rising demand for e-commerce.
At the moment, the Pos Laju service accounts for nearly one-third of total earnings.
“This year will be the final year when our mail business will be bigger than our Pos Laju business,” he told StarBiz during a visit to Menara Star yesterday.
“I am pretty confident that by looking at the numbers now, by next year, Pos Laju will be bigger than our mail business.”
Shukrie said year-on-year earnings from its mail business were shrinking slowly.
“Mail contribution is slightly over one-third, but it’s declining between 4% and 5% every year. Pos Laju, meanwhile, has been growing between 20% and 30% every year.
“Next year, I’m confident it will surpass our mail business. Right now, they are almost on par in terms of earnings.”
For its FY16, Pos Malaysia’s mail segment registered a higher revenue of RM905.4mil compared with RM741.7mil in the previous corresponding period, due to higher revenue in the transhipment business instead of a net drop in the traditional mail volume.
Its courier segment, meanwhile, registered a higher revenue of RM556.1mil compared to RM480.2mil, driven by increased demand from e-commerce.
Malaysia’s biggest beneficiary in the e-commerce space is GD Express Carrier Bhd (GDex), whose revenue is less than half of what Pos Laju is generating. For its FY15 ended June, GDex registered an earnings before interest, tax, depreciation and amortisation of RM41.4mil, indicating a margin of 20%. It commands a market capitalisation of RM2.14bil.
As for Pos Laju. according to Pos Malaysia’s annual report, the segment contributed RM55.4mil to the group’s results on a turnover of RM556.1mil, indicating a margin of 10%.
Pos Malaysia’s market capitalisation is RM1.64bil.
On another matter, Shukrie said the injection of DRB-Hicom’s logistics assets into Pos Malaysia would bode well for the postal services company as it planned to cater to the growth of e-commerce.
“For the last 200 years, Pos Malaysia’s operations have been last-mile operations. That’s how we’ve been doing business.
“But anything from first mile and in between, we have to use a third party. Over time, the margin is being compressed. It would be good if we’re in control of the entire chain end-to-end.”
Shukrie said Pos Malaysia was “going big” into e-commerce now, adding that it was the way forward for the company.
“And for us to do that, we need a warehouse specifically for e-commerce.”
Last December, DRB-Hicom had proposed to inject its logistics assets such as KL Airport Services Sdn Bhd and a parcel of freehold industrial land in Shah Alam into Pos Malaysia.
DRB-Hicom, which already owns a 32.21% stake in Pos Malaysia, will be issued with 245.75 million new Pos Malaysia shares for those assets.
“The best way to do that is to use a facility that’s readily available for us. It will provide between 1.5 million sq ft and 1.7 million sq ft of warehouse,” said Shukrie.
“We also plan to buy a piece of land in Shah Alam and convert it into an e-commerce warehouse as well as for automotive logistics.”