Kerry Logistics’ net profit up 81 percent in H1

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Kerry Logistics Network announced last week the Group’s interim results for the six months ended 30 June 2021.

Group’s Financial Highlights

  • Revenue increased by 68 percent year-on-year to HK$36,709 million (2020 1H: HK$21,885 million)
  • Core operating profit increased by 70 percent to HK$2,536 million (2020 1H: HK$1,489 million)
  • Core net profit jumped by 81 percent year-on-year to HK$1,530 million (2020 1H: HK$845 million)
  • Profit attributable to the Shareholders for 2021 1H was HK$3,380 million (2020 1H: HK$1,073 million)
  • Integrated Logistics (IL) business recorded a segment profit of HK$1,292 million (2020 1H: HK$1,139 million) and International Freight
  • Forwarding (IFF) business recorded HK$1,437 million (2020 1H: HK$379 million), which represent an increase of 13 percent and 279 percent, respectively
  • Interim dividend of 21.1 HK cents per Share, to be payable on Tuesday, 28 September 2021

William MA, group managing director of Kerry Logistics Network, commented: “The COVID-19 pandemic has entered into a new phase with the worldwide spread of the Delta variant, which has been severely affecting global and domestic supply chains and disrupting business operations at different levels around the world. These disruptions and capacity chokeholds, together with different government approaches and restrictions in tackling the pandemic, have compelled the logistics industry to move towards a growing focus on service customisation. Leveraging our core competency in providing highly customised solutions, KLN Group capitalised on the opportunities in this new environment and achieved record growth in both revenue and core net profit in 2021 1H.”

IL growing

The IL business reported a 13 percent segment profit growth, mainly riding on a booming manufacturing sector in Mainland China.

In Hong Kong, the warehousing business grew 18 percent backed by a higher occupancy. The logistics operations business increased by 9 percent as the pandemic remained largely under control since 2021 Q2.

In Mainland China, the IL business continued its rebound in 2021 1H, expanding by 82 percent year-on-year in segment profit. This was supported by the accelerated resumption of production, revived domestic consumption and thriving online shopping.

In Taiwan, the segment profit for the IL division maintained stable with a 5 percent growth.

In Asia, the IL division suffered a drop of 12 percent in segment profit as the pandemic continued to rumble across the region with prolonged lockdowns, restrictions and quarantine measures.

IFF thrived

The IFF business recorded a 279 percent segment profit growth in 2021 1H, mainly riding on the change in consumer behaviour and strong exports from Mainland China to the world.

The IFF business is experiencing a rapidly changing market and the Group is adjusting its strategy on a monthly basis depending on the development of COVID-19 pandemic, as well as unpredictable events.

The air freight sector continued to operate with scarce international belly cargo capacity provided by passenger aircraft, prompting the market to rely on freighters of limited space, which resulted in serious fluctuation in air freight capacity and rates.

In the ocean freight sector, congestion in destination ports has caused severe delays to vessel turnaround time and exacerbated the container equipment shortage in Asia. Currently, there are still huge backlogs in Mainland China where plenty of cargo vessels destined for the Americas and Europe were cancelled or delayed.

Proposed strategic investment from SF Holding

Upon the completion of SF Holding’s investment in the Group, the Group’s profit will have a significant adjustment in light of the disposal of the Hong Kong warehouse and the Taiwan businesses to Kerry Holdings Limited.

The cooperation will bring together the core competencies of S.F. Holding and the Group across multiple verticals to create a leading Asia-based global logistics platform to meet ever-changing demands.

William Ma concluded, “With no end to the pandemic in sight, KLN Group will continue to support our customers counter various supply chain challenges through customised and comprehensive solutions across major gateways. We are also ready to capture the growing opportunities in the booming and evolving e-commerce business. Meanwhile, our ongoing efforts in humanitarian logistics will expand our service capabilities to assist in disaster relief operations. Moving forward, the Group will further strengthen our product offerings to navigate a highly inefficient and volatile global supply situation.”