Kerry Logistics Network has announced the Group’s interim results for the six months ended 30 June 2020. The Group’s revenue increased by 10% Y-o-Y to *HK$21,885m, while its core operating profit increased by 12% to HK$1,489m.
Its Integrated Logistics (‘IL’) business recorded a segment profit of HK$1,139m, showing a 2% drop Y-o-Y. The International Freight Forwarding (‘IFF’) business recorded HK$403m, which represents an increase of 40% Y-o-Y. The drop in IL segment profit is mainly due to the reduced profit contributed by lesser number of warehouses in Hong Kong Y-o-Y.
William MA, Group Managing Director of Kerry Logistics Network, said, “In such highly volatile and uncertain environments, logistics has maintained its unrivalled importance. Kerry Logistics Network’s 2020 1H results clearly demonstrated our business diversity, adaptability and agility. The Group has not only adapted through the pandemic but achieved promising growth amidst heightened volatility and widespread downturn across industries.”
Integrated Logistics
Taking away the impact of having fewer warehouses in Hong Kong during the period, Kerry Logistics’ IL division recorded a 2% segment profit growth in 2020 1H. The pandemic and its resultant widespread lockdowns have caused a drastic drop in the demand in a large number of non-essential products and thus affected the global manufacturing market. As a result, warehouse operations in Asia have been severely impacted, but a strong growth in the last-mile fulfilment and e-commerce logistics resulted in a positive growth for the IL division.
In Hong Kong, the IL division recorded a 13% growth in its logistics operations. The division switched its business strategy from serving general consumption and regional distribution centres to fulfilling pandemic-related institutional demands and quickly expanding the essential supply sectors.
In Mainland China, the IL division reported a 37% decrease in 2020 1H, due to lockdowns. Business activities have started to pick up since April 2020 as work gradually resumed in late March.
In Taiwan, the Group’s IL business registered an 11% Y-o-Y rise in segment profit, driven by its last-mile capabilities and the performance of Science Park Logistics’ bonded operations as well as leveraging its position in pharmaceutical logistics in Taiwan.
In Asia, the Group was able to record a 6% growth in the IL segment profit, riding on the substantial growth of its e-commerce and last-mile operations. The performance of Kerry Express Thailand was particularly vigorous, with 36% growth during 2020 1H.
To further extend the Group’s last-mile and e-commerce capabilities, the Group has invested in a 42% effective interest in a private express companies in Vietnam, which is handling approximately 800,000 parcels a day. The investment was completed in May 2020.
International Freight Forwarding
Segment profit of the IFF division registered a 40% increase in 2020 1H. Contribution of the IFF business to the Group’s total segment profit has grown from 20% previously to 26% in 2020 1H.
The Group’s air freight business, from Asia to the world, surged from March to May 2020. The Group’s ocean freight business caught up in mid-May and June 2020 as customers replenished their dwindling inventories. In response to reduced capacity in air and ocean freight, the Group utilised its Eurasian road and rail freight network to devise alternative solutions for customers.
The Group completed the acquisition of the remaining 49% in Apex in March 2020. Apex’s business recorded a 6% growth in volume against the market trend of 7% contraction between January and July 2020, becoming the number one NVOCC from Asia to the US.
Source: Kerry Logistics
HK$ = $0.13 / HK$ = €0.11
