The Hong Kong-based third-party logistics provider increased net profit 1 percent to $548 million Hong Kong (U.S. $70.7 million) compared with the first half of 2015 as revenues grew 3 percent to HK$10.46 billion.
Kerry Logistics’ net earnings in the first half of 2016 ticked up 1 percent to $548 million Hong Kong (U.S. $70.7 million) compared with the same 2015 period despite a “tough” operating environment, according to the company’s most recent financial statements.
The Hong Kong-based third-party logistics provider saw first half revenues grow 3 percent year-over-year to HK$10.46 billion.
Kerry Logistics’ Integrated Logistics (IL) business segment reported a profit of HK$799 million, down less than 1 percent from first half 2015. The company attributed the tepid results primarily to flat global demand, which has led to decelerating trade activities and lower production volumes.
Kerry Logistics said it has attempted to offset declining volumes with the addition of new clients and contracts across various sectors in the first half. The IL division reported sustained growth in the Hong Kong market as well as in both mainland China and Taiwan despite a slowing Chinese economy.
“Although Thailand and Vietnam were affected by weak export demand, Asia’s growth as a whole was supported by India’s encouraging results as the group continues to tap into the growing opportunities in the country,” the company said.
The company’s International Freight Forwarding (IFF) unit, on the other hand, saw segment profits jump 9 percent to HK$208 million. Earnings growth in IFF division came primarily from increased volumes in South and Southeast Asia, particularly India, Singapore and the Philippines.
“The operating environment remained tough in 2016 1H due to flat global demand and stagnated trade flow in the logistics industry,” Kerry Logistics Group Managing Director William Ma said of the first half results. “Negative currency effects caused by the strong US dollar also affected our overall performance.
“Nonetheless, we held on strong to our core competences and achieved sustainable results, in which performance from major markets recorded steady growth,” he added. “Riding on the complete integration of APEX in the US in the next 18 months, the IFF division is expected to achieve higher growth than the IL division in 2016.”
Looking forward to the remainder of the year, George Yeo, chairman of Kerry Logistics, said that although the outlook remains challenging, the company should see improved performance in the second half.
“We are getting new customers in China who more than make up for reduced business from existing customers,” said Yeo. “We continue to invest in new projects. The Belt and Road Initiative continues to guide our overall strategy. The Greater Mekong Region is becoming a new strategic focus for us. We are also developing an overland transportation network for road, rail and intermodal freight services covering Central and West Asia.
“South Asia is a growing bright spot. Our recent investment in APEX strengthens our IFF network significantly,” he added. “IFF will become a more significant contributor to our overall performance in 2016. In addition, as global e-commerce grows, we will continue to strengthen our express capabilities to provide cost-effective last-mile deliveries to an expanding client base.”
During the first half, Kerry Logistics increased its stake in India’s Indev Logistics from 30 percent to 50 percent in an effort to grow market share in the region. The company said it expects to complete the Indev integration and rebranding in the second half of 2016.
As part of the company’s long-term IFF strategy, Kerry Logistics in June completed the acquisition of a majority stake in San Francisco, Calif.-based APEX Maritime.
APEX provides ocean and airfreight, customs brokerage, logistics solutions and door-to-door delivery services in the U.S. with a focus on consumables and perishables. The company ranks as a top-three non-vessel operating common carrier (NVOCC) in the transpacific trade, handling over 270,000 TEUs in 2015.
Kerry Logistics said the partnership will enable it to reach a more diversified group of U.S.-based customers and benefit from new opportunities in transpacific and other trades.
Kerry Logistics posts flat first half results despite ‘tough’ environment
