PETALING JAYA: If there would be another beneficiary of the coronavirus (Covid-19) pandemic apart from rubber glove manufacturers and healthcare companies, it has to be courier companies.
With the virus showing no signs of abating just yet, the fear of a second wave of Covid-19 is keeping Malaysians in the comfort of their own homes as they continue to practise social distancing.
This has certainly pushed more consumers to adopt online shopping as the new norm and have their goods delivered right to their doorsteps as the nation adjusts to life post pandemic.
Pos Malaysia Bhd, being the largest network courier in the country, is a beneficiary of this development.
This saw the group recording a 69% jump month-on-month (m-o-m) to an average daily parcel volume of 590,000 in April, during the full month of the movement control order (MCO).
For the first quarter of the year in particular, the group’s courier business actually saw an increase in parcel volume by 6.7% year-on-year (y-o-y), contributed by stronger demand from e-commerce and online marketplaces, aggressive digital and traditional sales and marketing drive, as well as improved mid-mile and last-mile efficiency.
GD Express Carrier Bhd (GDex) had also told StarBizWeek in an interview recently that their parcel volume has been growing rapidly since April.
It is one of those companies that is having the opportunity to “enjoy” the problem of customer demand outstripping its capacity.
In May alone, its daily volume has surpassed levels recorded in the company’s best years. Pos Malaysia is experiencing something similar, as its current levels are significantly higher than the range of around 300,000 parcels it used to deal with every day.
However, Pos Malaysia has been reporting huge losses and has been in the red in the past seven quarters.
In its latest results for the first quarter ended March 31,2020, the group posted a net loss of RM49.22mil.
It is not even making money from its operations, which saw it recording RM558.53mil in revenue but its cost of sales and operating expenses came in higher at RM573.75mil.
The group had in August last year, changed its financial year end from March 31 to Dec 31.
While the results for the first quarter this year are technically not comparable with the previous financial year, its net losses actually came in 65.12% lower compared to the three months ended March 31,2019.
Pos Malaysia’s three main business segments – postal, logistics and aviation – were all loss-making except for its other segment, which contributed a RM8.87mil to the group’s profit before tax, mainly from the digital certificates business and the Islamic pawn broking service ArRahnu.
Even as the e-commerce sector led to a surge in demand for courier services towards the end of March, it was not enough to cushion the impact from the fewer retail transactions that were recorded in post offices while its international business was affected by the cancellation of commercial and cargo flights and the suspension of business activities.
Moving forward, cost inefficiency is also set to be a major problem for the company, which several analysts have attributed to its unionised workforce.
Kenanga Research said in a report that given Pos Malaysia’s inability to close down post offices, its unionised workforce and losses in its postal services segment, losses are only expected to continue moving forward.
It added that the courier business will continue to operate in a competitive environment pressured by price and cost challenges.
One of the more positive aspects is that the group’s Integrated Parcel Centres (IPC) in Shah Alam and newly completed facility in KLIA has increased its processing capacity by 77% from 300,000 to 530,000 parcels per day, which will allow it to deal with the surge in demand from the e-commerce sector.
AmInvestment Bank Research concurred, stressing in a report that the main challenge is Pos Malaysia’s cost inefficiency due to the unionised workforce and its inability to rationalise its extensive network of post offices.
“The courier segment continues to face intense competition, resulting in margin squeeze, ” it says.
RHB Research believes the group’s losses would widen in the second quarter due to a further revenue shortfall during the extended MCO period but this could be mitigated by the spike in courier volumes.
The research house is quite optimistic as it expects this to push Pos Malaysia to return into the black in the second half alongside the normalisation of business activities.
Pos Malaysia plunged to its all-time low of 54 sen on March 19 but it has since rebounded. It closed at 97 sen yesterday, which on a year-to-date basis, was still a 34.46% decline.
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