The Kerry Logistics Network Limited announced their interim results for the past six months, and is proud to announce their growth.

 

William Ma, Group Managing Director of Kerry Logistics, said, “Although the world economy experienced growth in 2018 1H, global demand has been flat. Nevertheless, the China-US trade dispute has caused manufacturing capacities to shift from Mainland China to other Asian countries, bringing about an increase in shipping volume and production activities in Asia. Southeast Asia, in particular, has enjoyed the fastest growth in the region. Leveraging the strongest network in Asia and our diversified business portfolio, the Group achieved double digit growth in turnover, core operating profit, and core net profit in 2018 1H.”

 

Having benefitted from the booming intra-Asia trade and e-commerce business, the IL division achieved a 25% rise in segment profit in 2018 1H. The IL business in Hong Kong, Taiwan, and Asia as a whole is expected to remain a major earnings driver for the rest of the year.

 

In Hong Kong, driven by stable growth in revenue from existing customers and new customer gains, the segment profit of the logistics business grew by 71% in 2018 1H. The Group’s business in Taiwan saw a profit recovery in 2018 1H, and the IL segment profit is expected to pick up in 2018 2H.

 

Sustained by strong intra-Asia trade and increasing shipping volumes in the region resulting from the China-US trade tensions, the IL segment profit of Asia posted a 54% growth in 2018 1H. In Thailand, the Group’s IL segment profit recorded an 84% growth riding on the flourishing e-commerce business.

 

In July 2018, Kerry Express Thailand entered into a strategic partnership with VGI Global Media Public Company Limited (VGI), the subsidiary of Bangkok Mass Transit System Public Company Limited, and becomes the only express logistics partner of VGI and Bangkok Mass Transit System. Furthermore, the seaport business in Thailand has shown encouraging improvement following the berth extension at the Kerry Siam Seaport since March 2018.

 

In Mainland China, rising labour costs, subpar performance of certain customers in the electronics sector, and the China-US trade conflict continued to undermine the Group’s business. Despite its decelerating pace of growth, the decline in its profit eased in 2018 1H.

 

Supported by stable trade activities, the IFF division maintained growth in volume in 2018 1H, particularly in the North American and Indian Peninsula regions, resulting in a 6% increase in segment profit. Nevertheless, both profit and profit margin contributed by the IFF division have contracted as a result of the drop in performance in Mainland China.

 

Adhering to its long-term IFF strategy to expand its coverage worldwide, the Group acquired the Johannesburg-based Shipping and Airfreight Services (Pty) Ltd in May 2018 to expand its service offerings in South Africa.

 

The Group also established new subsidiary Kerry Freight Pakistan (Private) Limited to extend its foothold in Pakistan and leverage its first mover advantage along the China-Pakistan Economic Corridor.

 

Berth extension at the Kerry Siam Seaport in Thailand was completed in 2018 Q1 with its total length increased to 2.8 km. Phase two of the Kerry Bangna Logistics Centre in Thailand was completed in 2018 Q1. Moreover, Phase one of the inland ports in Mandalay, Myanmar was completed in 2018 Q2. Logistics facilities in Changsha and Wuhan, Mainland China, and Guanyin, Taiwan are under construction.

 

While strategically strengthening its asset portfolio, the Group also considered different options to unleash the value of its current portfolio. In Mainland China, the Group disposed of the underperforming Kerry Chengdu Logistics Centre, in Shuangliu County, Chengdu in May 2018. In July 2018, the Group disposed of a 17% interest in Kerry Express Thailand to VGI.

 

George Yeo, Chairman of Kerry Logistics, concluded, “The ongoing trade spat between Mainland China and the US is reshaping trade routes and global supply chains. While the trade volume between the two economies is expected to reduce in the near future, certain markets in Asia are likely to benefit conversely from the increased intra-Asia trade as customers look for alternative supply sources beyond Mainland China and the US. Moreover, Asia has been experiencing the fastest trade volume growth for both imports and exports driven by rising domestic consumption and increased investment. We expect our Asian business to continue to grow and contribute to a major part of the Group’s profit in three to five years’ time. Leveraging our expanding global network and solid coverage particularly in South and Southeast Asia, we are optimistic to maintain growth in the remainder of the year through exploiting new business opportunities and promising prospects in Asia and new markets along the Belt and Road trade paths.”