SingPost new CEO says US entities made “significant progress” but went backrupt after 1 year

It was reported that early this month, SingPost managed to sell off the assets of its two US e-commerce subsidiaries Jagged Peak and TradeGlobal, which were undergoing bankruptcy proceeding in the US.

Soon after SingPost’s two US subsidiaries filed for bankruptcy in Sep this year, they started selling off their respective assets. Early this month, a European contract logistics group, ID Logistics, bought the assets of Jagged Peak for US$15 million. Meanwhile, another company, Visible Supply Chain Management (VSCM), has also acquired TradeGlobal’s assets for an undisclosed amount.

SingPost has already written down the entire value of its US investments, taking an impairment charge of $98.7 million on the carrying value of TradeGlobal and Jagged Peak in the financial year ended in March 2019.

The two US e-commerce companies were acquired under previous SingPost’s CEO Wolfgang Baier for a total of US$184.4 million in 2015, four years ago. But the foray into the US e-commerce market was a disaster as the two companies racked up millions in losses. They had been a drag on SingPost’s profit for the last 3 years, causing SingPost’s market value to dive.

Baier himself was originally hired as a consultant to help SingPost revamp its business but somehow, he so impressed SingPost’s Board that he was hired as SingPost’s CEO in 2011. At the time when TradeGlobal was acquired in Oct 2015, Baier said in an interview that the acquisition will turn SingPost into a global e-commerce player. “It is connecting the dots to become a digital company. We are a global player,” he told ST.

In another interview with Nikkei Asian Review, he said entering the US will allow SingPost to “cover two-thirds of the global e-commerce market” and position the company as “one of the global leaders in e-commerce logistics.”

Then two months later in Dec 2015, he abruptly tendered his resignation from SingPost due to “personal reasons” but stayed on for a few more months to help in the handover. In May 2016, it was reported that Baier started selling his shares in SingPost. In one sale, he sold off 2.5 million shares for about S$3.9 million in total.

SingPost hires new CEO Paul Coutts

After Baier resigned, SingPost’s CEO position was vacant for about a year. Then on 1 Jun 2017, SingPost appointed Paul Coutts as the new CEO. Coutts joined SingPost from Toll Global Forwarding, one of the five divisions in the Toll Group. SingPost said he has more than 20 years of experience in “C-suite positions at major global logistics and postal companies”.

Last Aug, Coutts gave an interview to CNBC when he said there was “significant progress” made particularly in TradeGlobal. He said, “We improved the financial performance of our business in the US. Particularly, our trade global business which had been a problem business so we developed a turnaround plan for that business and they delivered on that turnaround plan for the year, for the last year, so that showed significant progress.”

He went on to describe how he had been transforming the TradeGlobal business so that it could better integrate with the business of the other US entity Jagged Peak and also getting it “closer to profitability”.

Coutts continued, “I want to describe the TradeGlobal business. It was a good solid warehousing and fulfilment business and it had some technology. The Jagged Peak business in the US is a technology platform, it’s a technology company and it does some warehousing and fulfilment but it does that kind-of down streaming activity.”

“So what we had to do was to reshape the TradeGlobal business so that it became a mirror image of Jagged Peak and that’s where we spent the last 12 months, making sure that we made that transformation. At the same time however, we had to re-engineer the business to get it closer to profitability, so again, we made progress as I mentioned earlier,” he added.

When asked when he would expect the US businesses to become fully profitable, Coutts replied that he hadn’t set a target but the key thing was that they had a plan.

“We’ve reshaped TradeGlobal now so it’s a mirror image of Jagged Peak. That makes an integration that much more smooth, much easier. And the key focal point really is around an e-commerce play,” he said.

“So Jagged Peak’s advantage is we have a technology, a software technology called Edge, which is a supply chain technology that connects everything end-to-end for consumers. And that’s the play that we’re now making in the TradeGlobal organization and we believe that putting those together will give us a much more powerful entity and of course we’ll drive synergy benefits out of that as well.”

About a year later after Coutts gave the interview, Jagged Peak and TradeGlobal would file for bankruptcy in Sep this year.

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