Freight Forwarders

Strong Asia trade boosts Kerry Logistics in first half of 2018

Kerry Logistics has reported it achieved double-digit growth in net proft and turnover for the six months ending 30 June propelled by strong Asia trade and increasing volumes.

Performance in the first half of 2018 was driven by intra-Asian trade which increased due to the China-US trade dispute, but also through acquisitions in Europe and South Africa.

Turnover increased by 27 per cent to HK$17,461 million (2017 1H: HK$13,705 million) and core net profit increased by 22 per cent to HK$700 million (2017 1H: HK$576 million).

Integrated logistics (IL) business recorded a segment profit of HK$1,107 million (2017 1H: HK$884 million) and international freight forwarding (IFF) business came in at HK$235 million (2017 1H: HK$222 million), which represent an increase of 25 per cent and six per cent, respectively.

Kerry Logistics managing director, William Ma 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.”

Kerry Logistics said the IL division benefitted from booming intra-Asia trade and e-commerce business, and business in Hong Kong, Taiwan, and Asia as a whole is expected to remain a major earnings driver for the rest of the year.

The company said the IFF division maintained its momentum supported by stable trade activities, and there was growth in volume in 2018 1H, particularly in the North American and Indian Peninsula regions. There was though as a drop in performance in Mainland China.

Kerry Logistics chairman, George Yeo said the ongoing trade spat between Mainland China and the US is “reshaping trade routes and global supply chains“.

He added: “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.”