Kerry Logistics sounds note of caution amid double-digit gains

Kerry Logistics Network  yesterday sounded a note of caution in the midst of market turmoil and economic slowdown on the mainland, but maintained an optimistic outlook for the long term after reporting double-digit gains in the year’s first half.

“Considering the financial turbulence and reducing demand, we have to view the future with considerable caution,” said chairman George Yeo Yong Boon.  “We will look at every project in China and value the risk.”

Kerry, a leading logistics service provider in Asia, reported core net profit grew 11 per cent year on year to HK$542 million for the six months to June.  Turnover rose 2 per cent to HK$10.1 billion.

The mainland profit for the integrated logistics segment dropped 8 per cent during the period, generating 16 per cent  of the whole sector profit. For international freight forwarding, (IFF), profit from the mainland grew 19 per cent, contributing 60 per cent  of the whole sector profit.

 Edwardo Erni,  managing director in China and North Asia, said he expected Kerry’s mainland business to grow slowly in the second half, but he maintained an optimistic view of China in the long term.

“China is still our focus. We see a lot of potential with the “one belt, one road” initiative and have signed a strategic cooperation agreement with China Railway  recently. Currently we are bidding for three projects together,” Erni said.

“The first-half result is better than expected,” said Kai Tan,  senior analyst at Macquarie Securities.  “The rise in profit margin of IFF to 3.5 per cent shows the company’s business expansion in South America and Middle East performed well and helped save cost.

 “Kerry has established logistics network across Asean countries and China, and is expanding further in countries like Cambodia and Myanmar. These moves will deepen the company’s business synergies ahead of a growth curve under difficult circumstances,” Tan added.

The Hong Kong company declared an interim dividend of 6 HK cents per share, the same as a year earlier.

Kerry Logistics is controlled by the Kerry Group, which controls SCMP Group, the publisher of the South China Morning Post.