Strengthened Profitability to Achieve Double-digit Growth in Core Earnings
2015-08-25 Hong Kong
Kerry Logistics Network Limited (“Kerry Logistics” or together with its subsidiaries, the “Group”; Stock Code 636), a leading logistics service provider in Asia, today announced the Group’s interim results for the six months ended 30 June 2015.
Group’s Financial Highlights
- Turnover increased by 2% to HK$10,135 million (2014 1H: HK$9,984 million)
- Core operating profit increased by 16% to HK$925 million (2014 1H: HK$796 million)
- Core net profit increased by 11% to HK$542 million (2014 1H: HK$490 million)
- Profit attributable to the Company’s shareholders increased by 11% to HK$701 million (2014 1H: HK$634 million)
- Integrated Logistics (“IL”) business achieved a 15% increase in segment profit to HK$807 million (2014 1H: HK$704 million)
- International Freight Forwarding (“IFF”) business recorded a 22% increase in segment profit to HK$191 million (2014 1H: HK$157 million)
- Achieved steady growth in overall operating profit and double-digit growth in core earnings
- Interim dividend of 6 HK cents per share recommended
William MA, Group Managing Director of Kerry Logistics, said, “The global economy continued to be plagued with volatilities in the first half of 2015. In face of these challenges, Kerry Logistics focused on honing its core competence in delivering highly customised solutions tailored to industries with growth potential. The Group has taken the opportunity during this weakened environment to integrate its businesses, improve operational efficiency and further expand into newly developed markets, resulting in strengthened profitability and sustained double-digit growth in our core earnings. The Group was able to achieve steady growth in overall operating profits, while businesses in the Greater China region remained relatively stable driven by our strong performances in Hong Kong and Taiwan.”
A Diversified Regional Facility Portfolio
The Group continued to enrich its logistics facility portfolio during the period. As at 30 June 2015, the Group managed a logistics facility portfolio of 43 million square feet, of which 23 million square feet were self-owned. Additionally, it operates with an asset ownership model to offer greater reliability and flexibility to customers.
In Thailand, Phase 1 of the Kerry Bangna Logistics Centre has been completed in 2015 Q2. It will serve as a new sorting centre for Kerry Express and a fulfillment centre for e-commerce customers. In Cambodia, the Group held a groundbreaking ceremony in July 2015 for the construction of a 160,000 square feet bonded warehouse at a Free Trade and Special Economic Zone located in Khan Dangkor, Phnom Penh.
Expansion via Investments and Acquisitions
The Group further expanded its operating scale and strengthened its network coverage through a number of investments and acquisitions.
In Greater China, Kerry Logistics (China) Investment Limited, a subsidiary of the Group, signed a strategic cooperation agreement with China Railway Import and Export Company (“China Railway”) in April 2015 in Beijing. The agreement will leverage China Railway’s extensive railway network and experience in undertaking key domestic and international projects, and effectively integrate them with Kerry Logistics’ strong network in Southeast Asia and its logistics service expertise.
In March 2015, the Group expanded its business in Indonesia by investing in PT Puninar Saranaraya, one of Indonesia’s largest logistics companies. Additionally, the Group took further steps to build an ASEAN-wide regional express platform to tap into the increasing trade and the growing e-commerce market in the region. Following the acquisition of a local express company in Cambodia in 2015, Kerry Logistics targets to complete the expansion into Laos and Malaysia in 2015 2H as well as into the Philippines, Indonesia, Myanmar and Singapore in the near future.
In the Middle East, Kerry Logistics strengthened its IFF capacity and network through acquiring a controlling stake in Able Logistics Group FZCO, an established international freight forwarder headquartered in Dubai with a leading position in the region, to offer global connections through a round-the-clock transit hub linking Asia to the Middle East, Europe and Africa.
The Group also further expanded its global network into Canada following an acquisition of the majority stakes in Total Logistics Partner Ocean Consolidators Inc. and Total Logistics Partner Air Express Inc., two Canadian freight forwarding companies focusing on Asia-Canada trade.
In the US, Kerry Logistics signed a memorandum of understanding with a major NVOCC, focusing on ocean freight from Asia to the US, to acquire a majority interest in the company. Specialising in trans-Pacific trade lanes, the company offers a full suite of services in the US.
Hong Kong Warehouse – Continuous Stable Growth
The Group’s Hong Kong warehouse portfolio comprises of nine warehouses with a combined GFA of 5.1 million square feet. It maintained nearly full occupancy and achieved double-digit growth in rentals for successful contract renewals during the period. The Group expects to see continuous stable growth from this business.
George YEO, Chairman of Kerry Logistics, said, “Despite challenges in the near term, the Group maintains a positive outlook for the industry in the medium to long term. Driven by the ‘One Belt One Road’ policy, and the further development of the new Silk Road, China’s logistics industry will become more sophisticated, playing to Kerry Logistics’ strengths of providing highly customised solutions tailored to industries with growth potential. As local players in both ASEAN and Greater China, Kerry Logistics will also benefit directly from the growth of the two regions as they become increasingly tied with one another. Internationally, we have set our sights on delivering long-term sustainable growth, both organically and through selective mergers and acquisitions. The Group will continue to work towards its strategic objective of strengthening trans-Pacific coverage, and expanding into niche markets in Europe, especially in the fashion business. Kerry Logistics will move deeper into the e-commerce by joining hands with strategic partners and strengthening its cross-border e-commerce logistics solutions across sectors. We expect this to become an important growth driver in the coming years.”