Addressing Pos Malaysia’s conundrums

POS Malaysia Bhd recently released its financial results for the year ended Dec 31, 2025 (FY25), and not surprisingly, the nation’s leading courier and logistics provider reported another astonishing year of losses.

Pos Malaysia reported a net loss of RM209.3mil, which was wider than the previous year’s net loss of RM202.7mil. In fact, this is the eighth year of consecutive losses for the company, including for the nine-month financial period ended Dec 31, 2019.

Cumulatively, Pos Malaysia has reported total losses of RM1.76bil, equivalent to RM2.25 per share over the eight years. Losses for FY25 were driven by its postal services as well as its logistics business segment, with aviation and others as the only profitable ventures of the group.

PN17 status?

There is a significant risk that the company may fall into Bursa Malaysia’s Practice Note 17 (PN17) category as its shareholders’ equity is now less than 8% of its share capital.

Pos Malaysia’s current liabilities also exceed its current assets by more than 100%, while its net debt level of RM293.5mil translates to a net gearing level of 355%.

Pos Malaysia’s interest coverage ratio is also weak, and its recent announcement to raise some RM1bil in the form of perpetual sukuk wakalah may provide some lifeline to the company, but it will be a costly exercise when its financials are weak.

As it is, in FY25, Pos Malaysia’s interest expense alone shot up to RM51.5mil, a 23% increase year-on-year. This, as some of the payables due are those related to its immediate holding company, which carried an interest rate of 6.23% as disclosed in Pos Malaysia’s FY24 financial statements.

Competitive industry

Despite the strong demand and growth outlook, the courier and logistics business is challenging for any market player, and given the fragmented industry and price competition, to turn around Pos Malaysia’s business operations is a tall ask.

In the past, we have seen companies like Nationwide Express Courier Services calling it quits due to sheer intense competition.

As at mid-January 2026, Malaysia had some 99 companies with non-universal service licences under the Postal Services Act, 2012, down from 121 that existed in November 2022.

While there has been some shakeout in the industry, consolidation of the industry is necessary before fundamentally strong market players can see profitability.

The recently released report on the Digital Economy Ecosystem under the Competition Act 2010 by the Malaysia Competition Commission is seen as providing key support in addressing some of the issues faced by Pos Malaysia, which includes the behaviour of the key digital sub-sectors, including eCommerce retail marketplaces and digital platforms, where some unfair market practices are being executed.

This includes the masking of delivery options and self-preferencing through vertically integrated logistics arms.

Consumers and sellers in eCommerce platforms must be given the choice for their preferred courier service provider, which is a core principle of fair competition.

When these platforms do not provide the choices for consumers, it is seen as profiteering, raising the platform’s market dominance, and weakening Malaysian-based logistics market players.

A national service?

Historically, before its privatisation, Pos Malaysia was a unit of the government providing services across the nation, especially in remote and rural areas.

Post-privatisation, although this remained subsidised by other profitable segments of the business, the current business model suggests that these operations are not sustainable unless steps are taken to compensate Pos Malaysia for providing these vital services in remote rural areas.

Hence, the Universal Service Obligation (USO) has been mooted to address Pos Malaysia’s obligation in providing nationwide postal services.

While Pos Malaysia may obtain some form of relief from USO, it still raises the question of how it can address its financial and operational weaknesses.

Operationally, Pos Malaysia is also faced with managing its human capital, judging by more than 16,000 employees that it has based as at end of 2024, as disclosed in its last reported annual report.

About 60% of them are unionised employees, which also poses a challenge to the company to be right-sized.

Staff cost, as disclosed in the FY24 annual report, is Pos Malaysia’s largest expense item, accounting for almost 48% of revenue, more than double compared with Singapore Post, which recorded staff cost of just over 20% of revenue in FY25.

Taking stock

Pos Malaysia is stuck between a rock and a hard place.

While operationally, it has weak fundamentals, its hands are tied from initiating its own internal restructuring, let alone transforming its business model.

Pos Malaysia faces multiple challenges, including the shifting market dynamics and price war, due to a highly competitive industry and a regulatory framework that is not conducive to consumer choices.

In addition, Pos Malaysia is also faced with declining market demand for its key service, which is the demand for delivery of letters, and rising pressure from the platform-based parcel market.

This has resulted in a clear distinction and opportunity for competitors to create their own niche markets, leaving Pos Malaysia far behind in the race to gain market share.

There are opportunities for Pos Malaysia to turnaround and show results if its plans are executed perfectly.

While certain market dynamics are not working in its favour and Pos Malaysia is not in a position to dictate those, there are ways Pos Malaysia can excel to improve not only its market share, but also to address its weak balance sheet and business operating margins.

Pos Malaysia has an extensive network of fleet to serve its business purposes, and, despite initiating a transformative journey in the past five years, it has yet to deliver the results that matter, ie, to return to profitability sustainably.

Pos Malaysia has taken steps to embrace the shifting market dynamics, with green incentives, enhanced governance standards, and digitalisation. But those are not enough to turn the company around.

In conclusion, while one can sympathise with Pos Malaysia on the challenges it faces in the marketplace, there is still a need for the company to have the drive, vision, and mission to lower its business operating cost by right-sizing its workforce.

Pos Malaysia must also address its weakening balance sheet to register some big wins in the form of asset monetisation, as it is close to falling into the PN17 category if nothing is done soon enough.

Time is not on Pos Malaysia’s side as it faces multiple conundrums.