Kintetsu World Express’ (KWE) financial results for the first nine months in 2019 show a drop in net sales Y-o-Y of 8.3%, reporting net sales of ¥*410.4bn, decreasing by ¥37bn compared to first nine months of the fiscal year 2018. During the nine months ending in December 2019, a general loss in momentum globally has slowed down growth for KWE as well. A recovering US economy, Europe’s continued sluggish trend, mainly in the Eurozone, and a weakened Japanese economy have contributed to the drop in net sales for KWE. Net income decreased also by 10.5% Y-o-Y, from ¥7.4bn to ¥6.7bn.
Despite decreasing figures in net sales across all regional segmentations, there is one exception, Other, that showed an increase of 11.5%, or ¥232m Y-o-Y.
Europe, Middle East and Africa has experienced the biggest drop in net sales as well as operating income. Net sales slowed by 15.3% to ¥27bn, decreasing by ¥4.9bn. Operating income dropped by 44.2% noting a ¥462m difference from 2018; ¥1bn in 2018 to ¥583m in 2019, mostly due to air freight imports in shipments slowing by 21.4%, from ¥100.8bn to ¥79bn in 2019. The only increase for this region has been reported in sea freight imports, rising 4.3% from ¥12.4bn to nearly ¥13bn.
Despite Southeast Asia having the least worrying decrease in net sales, as it only saw a slowdown of 5.0%, with a ¥2.2bn difference Y-o-Y; it was the company’s second worst performing segment in terms of operating income as it dropped by 27.2%, decreasing by ¥552m Y-o-Y, from ¥2bn to ¥1.5bn.
Japan’s net sales fell by 6.3% or nearly ¥7bn, whereas operating income dropped by 19.7% or ¥811m Y-o-Y.
The Americas’ net sales dropped by 7.5% or dropping ¥3.5bn Y-o-Y, with operating income also decreasing by 6.4% or ¥171m Y-o-Y.
East Asia & Oceania’s net sales slowed by 10.9%, dropping by ¥8.6bn Y-o-Y to ¥70.1bn in 2019. Its operating income decreased by 14.1%, or by ¥580m to ¥3.5bn compared to first nine months of 2018’s ¥4.1bn.
KWE’s contract logistics arm APL Logistics saw a drop of 8% in net sales, amounting to ¥11.7bn to ¥133.8bn in 2019; while operating income, including amortisation of goodwill, was the sole segment showing an increase from ¥5.7bn to ¥8.1bn Y-o-Y, increasing by ¥2.5bn in first nine months in 2019. The Y-o-Y improvement was through efforts in improving the operating margin including reduction of selling, general and administrative expenses.
KWE’s forecast for the end of the FY in March 2020, predicts a for total net sales by business a Y-o-Y decrease by 7.9% and a Y-o-Y drop of 11.0% in total operating income.
*$ = ¥110.013 / € = ¥119.840
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