H1 22: Kerry Logistics enjoys steep earnings growth

Kerry Logistics Network Limited (‘Kerry Logistics Network’ or together with its subsidiaries, the ‘Group’ or ‘KLN Group’; Stock Code 0636.HK) today announced the Group’s interim results for the six months ended 30 June 2022.

Group’s Financial Highlights

– Revenue increased by 39% year-on-year to HK$48,034 million (2021 1H: HK$34,654 million*)

– Core operating profit increased by 74% to HK$3,461 million (2021 1H: HK$1,993 million*)

– Core net profit jumped by 96% year-on-year to HK$2,372 million (2021 1H: HK$1,212 million*)

– Profit attributable to the Shareholders for 2022 1H was HK$2,377 million, which represents a year-on-year growth of 118% (2021 1H: HK$1,092 million*). Year-on-year drop is 30% if profit from discontinued operations in 2021 1H is also included

– Integrated Logistics (‘IL’) business recorded a segment profit of HK$717 million (2021 1H: HK$560 million), which represents an increase of 28%

– E-commerce and Express (‘E&E’) business recorded a segment loss of HK$393 million (2021 1H: profit of HK$209 million)

– International Freight Forwarding (‘IFF’) business recorded a segment profit of HK$3,398 million (2021 1H: HK$1,416 million), which represents an increase of 140%

– Interim dividend of 28 HK cents per Share to be payable on or around Friday, 30 September 2022

* Excluding discontinued operations

William MA, Group Managing Director of Kerry Logistics Network, said, “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 customers’ needs. We had also taken advantage of the opportunities arising from global supply chain reshuffling and delivered another record set of results. 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.”

Segmental Reporting

During the period, the Group adopted a new segmental reporting by carving out the E&E related business from the IL division as a standalone business segment, reflecting the internal management and different strategies of the two segments. The new reporting will provide a clearer picture for stakeholders to review the performance of different operations within the Group.

Integrated Logistics

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 2022 1H. 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 the Mainland of China during the period.

E-commerce and Express

Performance of the E&E segment contracted as Kerry Express Thailand (‘KETH’) in Thailand was caught in a price war during 2021 2H and 2022 1H. Nevertheless, losses have started to narrow since May 2022 and KETH is expected to come close to breakeven by the end of 2022.

International Freight Forwarding

The IFF segment remained as the growth driver of KLN Group and delivered a segment profit growth of 140% in 2022 1H. 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. 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.

William Ma concluded, “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. However, we remain optimistic about the Group’s full-year performance for our continuing operations. 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. 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.”