Standard & Poor’s (S&P) has lowered its long-term issuer credit rating for Singapore Post (SingPost) to BBB- from BBB, after the divestment of its Australian logistics and freight forwarding businesses.
The credit rating company also removed its ratings on SingPost from CreditWatch, where they placed them with negative implications on Dec 5, 2024.
S&P says that the rationale for downgrading its rating on SingPost is that the remaining core business of the company is “also facing structural decline”, following the divestment of two of its businesses.
“We view the sale of the Australian business, completed in March 2025, to be transformative, representing a significant pivot from the company's earlier strategy to establish Australia as a second home base,” reads the release by S&P dated July 25.
They note that the Australia business accounted for about 50% of operating profits (continuing and discontinued operations) for the fiscal year of 2025.
This loss of a key earnings pillar shifts the focus back to the postal and logistics business, which is facing structural and operating issues. It is also operating at significantly reduced scale and diversity, says S&P.
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“SingPost's core postal and logistics business faces weak profitability amid persistent structural decline, the high fixed cost of operating its postal office network, and rising competition in a highly fragmented market,” it adds.
As SingPost is currently undergoing management changes and board transformation, S&P says that it awaits clarity on the company’s strategy to regain competitiveness and profitability.
Meanwhile, S&P highlights that the company is likely to be in a net cash position over the next two years, as the sale of two businesses has increased its cash position to $750 million.
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“SingPost will have to invest to defend its postal and parcels business from a structural decline and to diversify. We believe the company's leverage may increase from a net cash position through investment cycles. The company has a track record of debt-fueled expansion. Leverage has increased to above 3 times since fiscal 2021 pursuant to SingPost's investment in Australia. This improved to 1 times from 4.1 times in fiscal 2024 after the sale of the Australian business in fiscal 2025,” the note reads.
In S&P’s view, SIngPost has to demonstrate its ability to reposition itself in the postal and logistics business under the new management team.
S&P adds that it may downgrade SingPost’s rating if they expect the company’s business competitiveness to weaken further. Consequently, it could also raise its rating if SingPost demonstrates a sustained track record of improving profitability across its core postal and logistics business, while maintaining earnings diversity and a conservative balance sheet position.
Shares in SingPost closed 0.5 cents higher or 0.8% up at 63 cents on July 25.
