KLN Group net profit soars

Hong Kong company, Kerry Logistics Network, has announced the group’s interim results for the six months ended 30 June 2021.

Revenue increased by 68 per cent year-on-year to approx. €3,985 million (2020 1H: €2,375 million).

Core operating profit increased by 70 per cent to approx. €275.3 million (2020 1H: €161.7 million)

Core net profit jumped by 81 per cent year-on-year to approx. €166,154,091 (2020 1H: €91.8 million).

The Integrated Logistics (IL) business recorded a segment profit of €140.3 million (2020 1H: €123.7 million) and International Freight Forwarding (IFF) recorded €156 million (2020 1H: €41.2 million) which represent an increase of 13 per cent and 279 per cent, respectively.

“The Covid-19 pandemic has entered into a new phase with the worldwide spread of the Delta variant, which has been severely affecting global and domestic supply chains and disrupting business operations at different levels around the world,” said William Ma, Group Managing Director of Kerry Logistics Network.

“These disruptions and capacity chokeholds, together with different government approaches and restrictions in tackling the pandemic, have compelled the logistics industry to move towards a growing focus on service customisation.

“Leveraging our core competency in providing highly customised solutions, KLN Group capitalised on the opportunities in this new environment and achieved record growth in both revenue and core net profit in 2021 1H.”

The IL business reported a 13 per cent segment profit growth, mainly riding on a booming manufacturing sector in mainland China.

In Hong Kong, the warehousing business grew 18 per cent backed by a higher occupancy. The logistics operations business increased by 9.0 per cent as the pandemic remained largely under control since 2021 Q2.

In mainland China, the IL business continued its rebound in 2021 1H, expanding by 82 per cent year-on-year in segment profit. This was supported by the accelerated resumption of production, revived domestic consumption and thriving online shopping.

In Taiwan, the segment profit for the IL division maintained stable with a 5.0 per cent growth.

In Asia, the IL division suffered a drop of 12 per cent in segment profit as the pandemic continued to rumble across the region with prolonged lockdowns, restrictions and quarantine measures.

The IFF business recorded a 279 per cent segment profit growth in 2021 1H, mainly riding on the change in consumer behaviour and strong exports from Mainland China to the world.

The IFF business is experiencing a rapidly changing market and the Group is adjusting its strategy on a monthly basis depending on the development of Covid-19 pandemic, as well as unpredictable events.

The air freight sector continued to operate with scarce international belly cargo capacity provided by passenger aircraft, prompting the market to rely on freighters of limited space, which resulted in serious fluctuation in air freight capacity and rates.

In the ocean freight sector, congestion in destination ports has caused severe delays to vessel turnaround time and exacerbated the container equipment shortage in Asia. Currently, there are still huge backlogs in Mainland China where plenty of cargo vessels destined for the Americas and Europe were cancelled or delayed.

Upon the completion of SF Holding’s investment in the group, the group’s profit will have a significant adjustment in light of the disposal of the Hong Kong warehouse and the Taiwan businesses to Kerry Holdings Limited.

The cooperation will bring together the core competencies of SF Holding and the Group across multiple verticals to create a leading Asia-based global logistics platform to meet ever-changing demands.

“With no end to the pandemic in sight, KLN Group will continue to support our customers counter various supply chain challenges through customised and comprehensive solutions across major gateways,” said Ma.

“We are also ready to capture the growing opportunities in the booming and evolving e-commerce business. Meanwhile, our ongoing efforts in humanitarian logistics will expand our service capabilities to assist in disaster relief operations. Moving forward, the Group will further strengthen our product offerings to navigate a highly inefficient and volatile global supply situation.”

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