Kerry Logistics expects a "tougher" second half of the year amid existing stresses in the supply chain as it reported positive figures in the first six months of 2022.
The Hong Kong-based logistics company saw its revenue increase by 39% year-on-year to HK$48,034 million as its core operating profit grew by 74% to HK$3,461 million.
Photo: Kerry Logistics
For the January to June period, Kerry Logistics also saw its core net profit jump by 96% year-on-year to HK$2,372 million from the HK$1,212 million reported during the same period in 2021.
"Despite ongoing uncertainty in the wider global economy and stress within the supply chains, KLN Group reacted quickly and provided innovative solutions to meet our customer's needs. We had also taken advantage of the opportunities arising from global supply chain reshuffling and delivered another record set of results," said William Ma, group managing director of Kerry Logistics Network.
"Comparing continuing operations, the Group's revenue and core operating profit registered growth of 39% and 74%, respectively. Our core net profit almost doubled from HK$1.2 billion to HK$2.4 billion," Ma added.
In its virtual announcement of financial results, Kerry Logistics said its Integrated Logistics (IL) business recorded a segment profit of HK$717 million, which represents an increase of 28%, while its E-commerce and Express (E&E) business recorded a segment loss of HK$393 million compared to the year-ago profit of HK$209 million.
Meanwhile, Kerry's International Freight Forwarding (IFF) business recorded a segment profit of HK$3,398 million, representing an increase of 140%.
IFF business as growth driver in H1
Kerry noted that the segment profit of the IL division in Asia reported "strong growth" on the back of reopening of borders across countries, easing of COVID-19 restrictions and a pickup in manufacturing and domestic consumption in the first half of 2022.
Nevertheless, the pandemic prevention and lockdown measures in the Mainland of China have curtailed manufacturing activities, causing an 11% drop in IL business segment profit in mainland of China during the period.
"The IFF segment remained as the growth driver of KLN Group and delivered a segment profit growth of 140% in 2022 1H," the logistics company said, adding that Greater China, including Hong Kong, contributed 28% and ex-Greater China contributed 72% of the total segment profit.
"The core base of the IFF business maintained its focus on Asia’s export market," it added.
Kerry Logistics said the segment also added Topocean as a new member of the Group in April 2022, further strengthening the Group’s capabilities to capture new growth in the Trans-Pacific trade lane.
Challenging second-half expected
"The pandemic's knock-on impact continues to weigh on the global economy while geopolitical tensions had already been dragging down consumer confidence and production. Due to ongoing uncertainty, we expect to face a tougher second half year," Ma said. "However, we remain optimistic about the Group's full-year performance for our continuing operations."
Ma noted that Kerry Logistics' strong Asia presence is expected to boost its performance in the second half of the year despite the various economic and geopolitical risks in the market.
"Thanks to our strong Asia-based position as well as customised and comprehensive logistics solutions, we have proven our ability to turn crises into opportunities and enable our clients to adapt to new challenges," the executive said. "Moreover, the momentum we have created with S.F. Holding allows us to enter new markets and capture cross-selling opportunities."
"Going forward, KLN Group's business is expected to benefit in terms of scale, coverage and capabilities through further integration and synergies between the two companies," Ma added.
