Pos Malaysia to see impact from minimum wage policy, says new chief

November 16, 20157:05 am484 views
Pos Malaysia to see impact from minimum wage policy, says new chief
Pos Malaysia to see impact from minimum wage policy, says new chief

Pos Malaysia Berhad, which employs almost 18,000 workers, expects the group to be impacted by the new minimum wage policy announced by the government in Budget 2016, according to its newly minted chief executive officer Datuk Mohd Shukrie Mohd Salleh.

He did not specify the expected quantum of impact from the new policy, which would come into force on July 1 next year, but assured that Pos Malaysia would continue to grow this financial year ending March 31, 2016 (FY16), even as he admitted to having a bearish outlook for 2016.

“The market is tough, but we have, over the years, successfully grown, without fail. This (financial) year, we will continue to grow. I’m quite optimistic about that, but… our cost pressure is very high now, the prices of goods have gone up.

“Recently, the government announced the new minimum wage, which will impact all players in the industry.

“Our side no doubt will be impacted as well. We are a very labour intensive organisation, we have almost 18,000 workers. So this sort of announcement will have a ripple effect because of manpower.”

Under Budget 2016, it was announced that the minimum wage for Peninsular Malaysia would be raised to RM1,000 from RM900 per month and for East Malaysia to be raised to RM920 from RM800 per month.

To ease the cost pressure, Shukrie, who took over the CEO post on November 1, said the group would invest more into automation; it had set up an automated mail and parcel sorting system.

For the first quarter ended June 30 (Q1FY16), Pos Malaysia saw a 5.8% rise in revenue to RM390.4 million from RM368.8 million last year, primarily driven by the transhipment business from the mail segment.

However, its profit slipped to RM22.74 million in Q1FY16 from RM27.11 million in Q1FY15, due to higher fixed mail segment’s operating cost.

Meanwhile, he is setting up a special team to focus on developing the group’s e-commerce segment as the group aims to “go big” in e-commerce.

“Although the mail section is declining, you can see the courier side is growing strongly, particularly in the e-commerce market. That’s why we want to go big (in) e-commerce,” Shukrie told media at the Pos Malaysia headquarters.

On the group’s international growth, he identified transhipment services for e-commerce player as an area where the group can tap into the e-commerce business.

Shukrie said in the e-commerce business, the most difficult part is reversed logistic, which involved the returning of goods to the merchant.

“The services offered by courier companies are similar, but when it comes to return side, it’s difficult to arrange. For Pos Malaysia, it is much easier because we have many outlets. That’s the niche we have.”

The group has, over the past few years, been implementing some initiatives to diversify its income stream.

Pos ArRahnu is one such diversification that has been growing, said Shukrie after announcing that it would be selling investment gold products at its 65 outlets nationwide via its collaboration with gold trading company Public Gold Group.

Pos ArRahnu, which was started four years ago, will contribute about RM25 million to RM30 million revenue to the group in FY16, said Shukrie. Pos ArRahnu is a wholly-owned subsidiary of Pos Malaysia focused on Islamic micro financing.

The gold products are available from 0.5g up to 500g, with a daily sale price based on the London Metal Exchange’s quoted price, plus a premium.

Shares in Pos Malaysia closed one sen or 0.26% lower at RM3.82 today for a market capitalisation of RM2.06 billion.

news source & image credits: themalaysianinsider.com

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