KLN Group braces for tough year ahead despite smashing records

Hong Kong business, Kerry Logistics Network (KLN Group), recently posted 96 per cent growth year-on-year in core net profit.

The company has released its group interim results for the six months ended 30 June 2022.

Revenue increased by 39 per cent year-on-year to $48,034 million HKD (approx. €6,089 million).

Core operating profit increased by 74 per cent to $3,461 million HKD (approx. €438,787).

Core net profit jumped to $2,372 million HKD (approx. €300,709).

“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,” said William Ma, Group Managing Director of Kerry Logistics Network.

“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 per cent and 74 per cent, respectively. Our core net profit almost doubled from $1.2 billion HKD to $2.4 billion HKD.”

During the reported 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 (IL)
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 1H 2022. Nevertheless, the pandemic prevention and lockdown measures in the Mainland of China have curtailed manufacturing activities, causing an 11 per cent drop in IL business segment profit in the Mainland of China during the period.

E-commerce and Express (E&E)
Performance of the E&E segment contracted as Kerry Express Thailand (‘KETH’) in Thailand was caught in a price war during 2021 2H and 1H 2022. 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 (IFF)
The IFF segment remained as the growth driver of KLN Group and delivered a segment profit growth of 140 per cent in 1H 2022. Greater China, including Hong Kong, contributed 28 per cent and ex-Greater China contributed 72 per cent 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.

“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,” said Ma.

“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.”