HONG KONG, CHINA - Media OutReach - 30 August
2018 - Kerry Logistics Network Limited ('Kerry Logistics' or together with its
subsidiaries, the 'Group';
Stock Code 0636.HK) today announced the Group's interim results for the six months ended 30 June 2018.
The Group's Financial Highlights
- Turnover increased by 27% to HK$17,461
million (2017 1H: HK$13,705 million)
operating profit increased by 19% to HK$1,216 million (2017 1H: HK$1,019 million)
- Core net profit increased by 22% to HK$700 million (2017 1H: HK$576
- Profit attributable to the Shareholders increased by 20% to HK$948
million (2017 1H: HK$788 million)
Logistics ('IL') business recorded a segment profit of HK$1,107 million (2017 1H: HK$884 million) and International Freight Forwarding ('IFF') business recorded HK$235 million (2017 1H: HK$222 million),
which represent an increase of 25% and 6%, respectively
- Interim dividend of 9 HK cents per Share, together with a special
dividend of 12 HK cents per Share, totalling 21 HK cents per Share, to be
payable on Friday, 5 October, 2018
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
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.
IFF Momentum Maintained
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.
In June 2018, the Group strengthened its project logistics capabilities
through the acquisition of a majority stake in the Milan-based Saga Italia
S.p.A., which is specialised in project logistics, heavy lift services, and
material management. In the same month, the Group deepened its rail and road
freight capabilities by launching new cross-border rail and trucking services
from Mainland China through Kazakhstan to Caucasus and Turkey, so as to capture
the growing trades in new markets and Europe.
In July 2018, the Group's member company Globalink and Georgia's Anaklia
City JSC signed a memorandum of understanding to cooperate in the development
of the Anaklia Deep Sea Port and Special Economic Zone in Georgia. The port,
scheduled for opening in 2020, is expected to become one of the largest in the
Black Sea region.
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.
Asset Portfolio Broadened
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.
Asset Value Unleashed
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."
About Kerry Logistics Network Limited (Stock Code 0636.HK)
Kerry Logistics is an Asia-based, global 3PL
with the strongest network in Asia. Its core competency is providing highly
customised solutions to multinational corporations and international brands to
enhance their supply chain efficiency, reduce overall costs and improve
response time to market. Kerry Logistics has a network covering 53 countries
and territories, and is managing 53 million sq ft of land and logistics
facilities worldwide, providing customers with high reliability and flexibility
to support their expansion and long-term growth. Kerry Logistics Network
Limited is listed on the Main Board of the Hong Kong Stock Exchange and is a
selected Member of the Hang Seng Corporate Sustainability Index Series 2017-2018.