Singapore Post (SingPost) has lost a top executive linked to its key e-commerce division.
It said on Monday that Marcelo Wesseler has resigned as chief executive officer (CEO) of SP Commerce.
SP Commerce is the integrated entity of SingPost’s former e-commerce division SingPost eCommerce with US-based e-commerce provider TradeGlobal Holdings and the company’s US unit Jagged Peak Inc. E-commerce-related revenues now make up half of the group’s revenue.
Paul Demirdjian, currently the president and CEO of Jagged Peak, has been appointed interim CEO of the US businesses with immediate effect. He will oversee the group’s businesses in the United States.
Mr Wesseler will assist the company to ensure a transition of duties during his period of notice until June 5, 2017.
Following the integration of the two US businesses, SP Commerce was to expand its e-commerce logistics footprint in the US, the largest retail market in the world.
In a press statement in 2016, the company said SP Commerce was “connecting the dots in building a global e-commerce logistics solution and a unique ability to provide access to China and the rest of Asia Pacific markets”.
But SingPost had in February flagged the risk of a “significant” impairment to the carrying value of TradeGlobal on the back of a feeble showing.
The warning came as third-quarter net profit attributable to equity-holders fell 27.9 per cent to S$31.4 million while underlying net profit was down 28.5 per cent at S$31.4 million.
The declines were due to operating losses in the US e-commerce business, costs related to the new regional e-commerce logistics hub and a fall in domestic mail volumes.
In particular, one of TradeGlobal’s largest customers faced financial difficulties, and SingPost said it reduced business with it as part of risk mitigation.
That customer has since filed for bankruptcy under Chapter 11 of the US Bankruptcy Code. Another key TradeGlobal customer had also decided to in-source its e-commerce freight operations.
TradeGlobal incurred a significant loss instead of a projected profit in the third quarter peak season and it is expected to make a loss for the full year, said SingPost in February.
The business is being restructured to improve its performance. It added that that for the nine months ended December 31, 2016, TradeGlobal has not achieved the underlying profit assumptions of the business plan that supported the investment.
Explaining this, SingPost said: “The e-commerce segment operates in an environment where margins are under pressure amid intense competition and changing consumer behaviour.
The group is facing challenges in the operating environment in the US.”
Shares of SingPost closed unchanged at S$1.38 on Monday before the announcement. Some 4.5 million shares changed hands.
leejamie@sph.com.sg
This article was first published on Mar 07, 2017.
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