Kerry Logistics H1 net profit rises 26% spurred by ecommerce logistics
Kerry Logistics scored a first-half-year net profit of HK$845 million, up 26 percent over the same period last year, despite a significant downturn in warehouse business caused by the Covid-19 pandemic.
A decline in logistics revenue from operating fewer warehouses in Hong Kong was offset by strong growth in last-mile fulfillment and e-commerce logistics.
Demand for general warehousing and regional distribution centers plummeted this year across Asia with the coronavirus’ impact on global manufacturing and consumption patterns. Kerry Logistics said it quickly exited several warehouses in Hong Kong and pivoted to handle logistics for pandemic-related medical gear and other essential supplies.
The Hong Kong-based third-party logistics company credited the financial success to its freight forwarding operation, which generated a 40 percent increase in first-half net profit.
William MA, group managing director of Kerry Logistics Network, said, “The Covid-19 outbreak has brought a monumental change to the fundamentals of life, from how we live and work to how we produce and consume. For now, there is no end to the pandemic in sight, nor hint of what the ‘new normal’ will look like. In such highly volatile and uncertain environments, logistics has maintained its unrivalled importance. Kerry Logistics Network’s 2020 1H results clearly demonstrated our business diversity, adaptability and agility. The group has not only adapted through the pandemic but achieved promising growth amidst heightened volatility and widespread downturn across industries.”
Taking away the impact of having fewer warehouses in Hong Kong during the period, Kerry Logistics’ IL division recorded a 2 percent segment profit growth in 2020 1H. The pandemic and its resultant widespread lockdowns have caused a drastic drop in the demand in a large number of non-essential products and thus affected the global manufacturing market. As a result, warehouse operations in Asia has been severely impacted, but a strong growth in the last-mile fulfilment and e-commerce logistics resulted in a positive growth for the IL division.
In Hong Kong, the IL division recorded a 13 percent growth in its logistics operations. The division switched its business strategy from serving general consumption and regional distribution centres to fulfilling pandemic-related institutional demands and quickly expanding the essential supply sectors.
In Mainland China, the IL division reported a 37 percent decrease in the segment profit in 2020 1H, due to lockdowns and the Group’s active participation in a wide range of relief work. Business activities have started to pick up since April 2020 as work gradually resumed in late March. Kerry Logistics remains optimistic that its full year results will improve.