News / Kerry reports profits up as it swoops on CIS forwarder to boost its footprint in Asia

Honkauees

Kerry Logistics has revealed it is targeting an acquisition operating in the Commonwealth of Independent States (CIS).

The news came as the group announced its full-year 2016 results in Hong Kong today, which highlighted increased revenue and profits.

Kerry said it had definitive agreements to acquire a Dubai-based freight forwarding group active in nine CIS countries and that the deal would be complete by May.

Operating in air, rail and road freight, the unnamed group is expected to open the door for Kerry to markets with growth prospects linked to China’s One Belt, One Road project.

Chairman of Kerry Logistics George Yeo said the acquisition would significantly expand its Central Asian coverage via the new road and rail freight routes from China to Europe and Pakistan.

“It will enable us to offer different options to our customers,” he said. “Step-by-step, we are becoming the premier logistics service provider in Asia.

“Whatever changes may result from policy changes in the US and other countries, Kerry Logistics stands ready to help our customers adjust to them quickly and optimally.”

Full-year revenues for the group increased 14% year-on-year to HK$24bn (US$3bn), resulting in a 4% increase in operating profits, which exceeded HK$1.8bn. Net profit was also up 4%, to HK$1.1bn.

Group managing director William Ma said the company had managed to weather “market headwinds” and minimise their macro-economic impact on its business.

“Despite the tough operating environment, the group managed to achieve a 14% growth in turnover, while core net profit grew by 4% in 2016,” said Mr Ma.

“The sustainable increase in earnings was attributable to the strong growth of our forwarding business, solid growth in South and South-east Asia, as well as synergies generated from recent acquisitions.”

The international freight forwarding (IFF) division increased its profits by 24%, to HK$448m, which Mr Ma said was down to contributions from Apex – acquired in June – in the US and robust Asian growth.

Freight forwarding growth In Asia saw India, Singapore and the Philippines singled out as strong markets.

The group had also restructured its business in mainland China and the Greater Mekong region, while new divisions were set up to focus on project, rail and multimodal developments across Asia and Europe.

Integrated logistics saw profit growth of 1%, up to HK$1.65bn. However, the division contributed 79% of the group’s total profit.

Despite a softening in the rental market, Kerry’s Hong Kong warehousing operations reported slight growth, and both Hong Kong and Chinese logistics operations saw growth from new business and customer wins.

“Other parts of ex-Greater China reported healthy performance,” said the group. “Express continued to grow from increased intra-ASEAN e-commerce and cross-border logistics activities. Demand and growth were particularly strong in Thailand.

“In Vietnam, restructuring of the express business was completed with new e-commerce customers won.”

Yesterday, The Loadstar reported that the group had agreed to sell its 15% interest in Asia Airfreight Terminal Company.

“The disposal represents a continuation of the group’s strategy to streamline its businesses and increase its overall performance and prospects,” said the group.