2023-03-28 Hong Kong
Kerry Logistics Network Limited (‘Kerry Logistics Network’ or together with its subsidiaries, the ‘Group’ or ‘KLN Group’; Stock Code 0636.HK) today announced the Group’s annual results for 2022.
Group’s Financial Highlights
- Revenue increased by 10% to HK$86,649 million (2021: HK$78,955 million*)
- Core operating profit dropped by 12% to HK$4,790 million (2021: HK$5,441 million*)
- Core net profit increased by 11% to HK$3,572 million (2021: HK$3,220 million*)
- Profit attributable to the Shareholders was HK$3,579 million, which represents a growth of 8% (2021: HK$3,309 million*). Year-on-year drop is 55% if profit from discontinued operations in 2021 is also included
- Integrated Logistics (‘IL’) business recorded a segment profit of HK$1,375 million (2021: HK$1,073 million*), which represents an increase of 28%
- E-commerce and Express (‘E&E’) business recorded a segment loss of HK$826 million (2021: profit of HK$41 million)
- International Freight Forwarding (‘IFF’) business recorded a segment profit of HK$4,703 million (2021: HK$4,825 million*), which represents a slight drop of 3%
- Proposed final dividend of 38 HK cents per Share to be payable on or around Thursday, 8 June 2023
* Excluding discontinued operations
William MA, Group Managing Director of Kerry Logistics Network, said, “2022 was a turbulent year. For the logistics industry, it was a pendulum swinging from one extreme to the other with severe supply-demand fluctuations. Inflation, rising interest rates, overstocking alongside consumers’ shift in spending pattern and overcapacity, all led to a sharp drop in the global product demand and purchase orders in 2022 2H. Despite a tough 2022, KLN Group recorded a revenue of HK$86.6 billion and a core net profit of HK$3.6 billion in its continuing operations riding on its unparalleled network in Asia, diversified global service offerings and cross-selling synergies with S.F. Holding in various arenas.”
The segment profit of the IL division recorded a 28% growth supported by the increase in demand for pandemic-related services in Hong Kong as well as the rebound of production activities in Asia. Following the subsequent reopening of the Mainland of China, the IL segment is expected to maintain its growth momentum in 2023 riding on a rebound in retail sales and household consumption.
E-commerce and Express
The E&E division registered a drastic decline in its segment profit due to the intense competition Kerry Express Thailand faced in 2022. A series of restructuring and lean programmes has been launched to improve profitability. The loss is expected to narrow in 2023.
International Freight Forwarding
The IFF division reported only a 3% drop in segment profit in 2022 despite an extremely volatile market. Asia exports plunged in 2022 2H as global demand for finished products and purchase orders started falling. Coupled with a swift increase in both ocean and air freight capacity, freight rates tumbled from unprecedented highs within a short period of time, putting the global freight forwarding sector under tremendous pressure. Extraordinary events and world affairs continued to reshape the global supply chains. Higher freight capacity and low cargo volume were spread across countries, posing increasing challenges to the freight forwarding industry. Nonetheless, the IFF business was able to maintain its profit margin at a similar level as the previous year and will continue to actively look for new business opportunities.
Integration With S.F. Holding
The business integration and development between KLN Group and S.F. Holding is progressing smoothly and successfully, strengthening KLN Group’s IL, IFF and express service capabilities, particularly those within Asia. To enhance KLN Group's air freight capacity and last-mile delivery capabilities, KLN Group is expanding its own-controlled air freight network and seeking new business potentials with S.F. Airlines by developing new products, services and trade routes. KLN Group’s cross-border express network in Southeast Asia has also gained ground. The synergies thus created are further increasing KLN Group’s competitiveness and diversity of global solutions it offers across the region.
William Ma concluded, “The global economy is poised to experience a deeper slowdown in 2023 with greater market volatility, uncertainties and risks for the year. While the road back to full recovery will be long and bumpy, Asia exports will rebound gradually in 2023 Q2 at the earliest, in an optimistic scenario. 2023 will be one of the most challenging years for the global logistics market in more than a decade. Considering that KLN Group achieved record results in 2022 1H, the Group expects a considerable disparity for 2023 in comparison. Looking ahead, the Group will continue to take an active part in the global supply chain reshuffling as the logistics landscape evolves, while adapting to shifting market conditions to serve its customers’ ever-changing needs.”