Kerry sees profits fall back to normality in 2023

Kerry Logistics

Kerry Logistics, now owned by the Chinese express company S.F. Express, has just announced a dramatic fall-back in its sales and profits in 2023, its annual results outlining a 42% fall in revenue and a 61% fall in what it calls “core operating profit”. However, in a useful metric, Kerry also compares its 2023 results with those of 2019, underlining that the fall in profits represents a return to some sort of normality. 

The ‘Integrated Logistics’ business, which might be described as contract logistics, saw a 7% fall in profits apparently due to the “shrunken demand for pandemic-related services and a slower recovery of the retail market than anticipated”. In a theme that is repeated elsewhere in the company, economic activity in Kerry’s home market of Hong Kong was muted although other markets saw higher growth, with China seeing an increase in profits of 17% and “other parts of Asia” up 11%. 

The fall in profits at the ‘International Freight Forwarding’ business was more dramatic with 70% drop. This was explained by Kerry as being due to “excess inventories, subdued purchasing power and stagnant export growth, in particular in Asia”. More specifically the return to normality has led to falls in margins on freight forwarding activity in almost all markets and Kerry’s forwarding operation reflected this. The fall in profits was particularly sharp in business with the America’s, however Kerry pointed out that profits for the freight forwarding business are still 23% higher than in financial year 2019.  

Several qualifications should be noted about these results. Firstly, Kerry has sold its express businesses to its parent company S.F. Express. In addition, Kerry has benefitted from a number of what it described as “mega industrial projects” in China, Central Asia and Europe, served by what is presumably its project logistics capability within its freight forwarding business. Kerry said that it expected this business to be “one of the development drivers of the IFF division soon”. Judging by the comments of Kerry’s management, there will be further major collaboration with S.F. Express in the near future.

Author: Thomas Cullen

Source: Ti Insight

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