Kerry Logistics H1 net profit drops 85%

Hong Kong Stock Exchange-listed Kerry Logistics reported a 47 percent decline in revenue at HK$25.3 billion ($3.3 billion) for the first half of 2023, and net profit dropped 85 percent to HK$368 million ($48 million).

While the integrated logistics business was stable and recorded a segment profit of HK$718 million, e-commerce and express business reported a segment loss of HK$505 million. International freight forwarding business recorded a 82 percent decline in segment profit at HK$621 million.

“In 2023 H1, global trade volume and growth remained subdued," says Vic Cheung, Managing Director, Kerry Logistics Network. "Freight rates and volume stayed depressed while supply chain demand remained stagnant. During the three years ended December 31, 2022, KLN Group’s flexible and innovative supply chain solutions enabled it to benefit from the supply and demand mismatch during the pandemic and achieved exceptionally good results. However, the extraordinary circumstances in 2021 and 2022 proved an anomaly that distorted year-on-year comparisons for logistics companies including KLN Group. After the particularly difficult 2023 Q1, the group’s overall performance has bottomed out. Although the group’s core net profit reported a decrease of 85 percent in year-on-year terms, the performance in 2023 Q2 recorded more than 30 percent quarter-on-quarter growth. The Group’s resilience, agility and unique position in Asia are expected to carry it through the storm in 2023.”

E-commerce and express
While the E&E division continued to register a segment loss, Kerry Express Thailand, the major contributor of the E&E business, is expected to stabilise in Q42024, the release added. "On July 25, 2023, KLN Group announced the transfer of certain companies engaging in express delivery services in the Asia Pacific and Europe to an indirect wholly-owned subsidiary of S.F. Holding as a move to reorient gradually its focus towards expanding the Group’s core IL and IFF businesses as well as creating greater synergies with S.F. Holding."

H2 outlook
2023 is shaping up to be a tough year for the global logistics industry, adds Cheung. "Yet, the extreme circumstances under the pandemic are gradually fading in global logistics activities and there are signs of improvement in both freight rates and volumes in KLN Group’s key markets. Using the pre-pandemic FY2019 as the base, we are confident to deliver healthy and sustainable growth in segment profits in our integrated logistics and international freight forwarding divisions. We are also optimistic that the stable performance of the IL business is likely to keep up the momentum in H22023. Within the E&E segment, Kerry Express Thailand is expected to stabilise in Q42024. Throughout the pandemic, KLN Group has supported our customers continually and consistently with flexible alternatives and ad-hoc solutions. The Group’s unwavering commitment to serving customers well under unprecedented market conditions has deepened customers’ trust in the Group which will enable us to capture opportunities when the market recovers.”