Kerry Logistics core net profit up 26%

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Kerry Logistics Network has revealed Group interim results for the six months ended 30 June 2020. Group revenue increased by 10% year-on-year to HK$21,885 million (2019 1H: HK$19,810 million). Core operating profit increased by 12% to HK$1,489 million (2019 1H: HK$1,330 million). Core net profit jumped by 26% year-on-year to HK$845 million (2019 1H: HK$669 million)

William MA, group managing director of Kerry Logistics Network, said: “The COVID-19 outbreak has brought a monumental change to the fundamentals of life, from how we live and work to how we produce and consume. For now, there is no end to the pandemic in sight, nor hint of what the ‘new normal’ will look like. 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.

“The Group’s 26% growth in core net profit under tremendous difficulties is a testament to our flat corporate structure and the skills and talents of our frontline staff. Their dedication has made it possible for us to maintain a 24/7 service in our 150 international gateways despite global lockdowns and restrictions. Since the beginning of the pandemic, the Group has been enforcing strict social distancing measures in all our workplaces. Nonetheless, we still registered 59 confirmed cases among our staff members as of today, with three still undergoing treatment: two in Indonesia and another in Brazil. I am extremely proud of our colleagues’ courage and commitment to continuing to provide professional services to our customers during these trying and disruptive times. As the world continues to claw its way to recovery from the COVID-19 pandemic, I am confident that Kerry Logistics Network, together with our customers, colleagues and shareholders, will emerge as a better and stronger company.”

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 has 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 the segment profit in 2020 1H, due to lockdowns and the Group’s active participation in a wide range of relief work. Business activities have started to pick up since April 2020 as work gradually resumed in late March. Kerry Logistics remains optimistic that its full year results will improve.

In Taiwan, the Group’s IL business registered an 11% year-on-year rise in segment profit, driven by its strong last-mile capabilities and the strong performance of Science Park Logistics’ bonded operations as well as leveraging its leading 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 in its bottom line 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 one of the biggest private express companies in Vietnam, which is handling approximately 800,000 parcels a day. The investment was completed in May 2020.

The global freight forwarding market was among the hardest hit sectors, made more severe due to travel bans. However, Kerry Logistics leveraged its unique market position as one of the very few Asia-based global freight forwarders, with broad exposure in key gateways across continents and ability to capture new business opportunities as the pandemic spread.

With a global presence across 58 countries, Kerry Logistics Network has established a solid foothold in half of the world’s emerging markets. Its diverse infrastructure, extensive coverage in international gateways and local expertise span across China, India, Southeast Asia, the CIS, Middle East, LATAM and other locations.

Kerry Logistics Network generated a revenue of over HK$40 billion in 2019 and is the largest international logistics company listed on the Hong Kong Stock Exchange.