Hong Kong-based firm to focus on expanding its asset-light IFF business organically and through M&A, after benefiting from increased intra-Asia trade.
Kerry Logistics posted a first half-year profit from its International Freight Forwarding (IFF) business of HK$288 million, a rise of 22% on the same period last year, encouraging it to continue expanding its asset-light IFF business organically and through mergers and acquisitions (M&A).
The Hong Kong-based firm attributed the gain to “increased trade from Mainland China to other Southeast Asian countries and within Asia”.
It said that “taking into account the positive profit growth and expansion potential in the IFF division, the group will continue to focus on expanding its less asset-heavy IFF business both organically and through mergers and acquisitions”.
Kerry Logistics’ biggest segment of business, Integrated Logistics (IL), recorded a “moderate” increase in profit (+5%) to HK$1,162 million, “buoyed by positive performance of its Hong Kong business and continued expansion in Taiwan, coupled with the steady growth of its operation in Asia”.
Commenting on the first half of the year, Kerry Logistics’ group managing director, William Ma, noted that global economic growth had “markedly slowed down” during the period with weakened trade and manufacturing, adding: “The ongoing international trade disputes and unresolved negotiations have created further adverse conditions and accelerated changes in the global supply chains. Rising political and social turmoil in Hong Kong added pressure to the already softening economy.”
Turning to the outlook, Ma underlined that global economic growth is expected to remain weak in 2020, as policy uncertainties and geopolitical tensions continue to cloud the trade environment.
“The current political and social disquiet in Hong Kong, which is the group’s key market, is expected to adversely impact the Group’s performance in 2019 2H. Nevertheless, the Group is in a resilient position to withstand difficult market conditions, sustained by its expanding global network and diverse range of businesses.”
Stronger results elsewhere in Asia should be able to offset the weak performance in Hong Kong – highlighting Taiwan in particular, which Kerry Logistics expects to remain one of the growth drivers in Asia in the second half of the year.
The company is also looking to capitalise on the strong growth impetus in cross-border e-commerce, in particular, exports from Mainland China, and the intra-Asia trade. The Group “will pursue further strategic setups that will optimally deploy its resources to seize the e-commerce growth potential in the region”.
Source: Lloyd’s
