HONG KONG SAR – Media OutReach – 28 August 2023 – Kerry Logistics Network Limited (“Kerry Logistics Network” or, together with its subsidiaries, the “Group” or “KLN Group”; stock code 0636.HK) today announced the Group’s interim results for the six months ended 30 June 2023 .
Group financial highlights
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Revenue fell 47% YoY to HK$25,315 million (H1 2022: HK$48,034 million)
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Core operating profit decreased by 84% to HK$568 million (H1 2022: HK$3,461 million)
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Core net profit also fell 85% year on year to HK$368 million (H1 2022: HK$2,372 million).
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Profit attributable to shareholders for the first half of 2023 was HK$368 million, down 85% year-on-year (first half of 2022: HK$2,377 million) .
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The Integrated Logistics (“IL”) business remained stable and recorded a segment profit of HK$718 million (H1 2022: HK$717 million).
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The E-commerce and Express (“E&E”) business reported a segment loss of HK$505 million (H1 2022: HK$393 million).
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The International Freight Forwarding (“IFF”) business recorded a segment profit of HK$621 million (H1 2022: HK$3,398 million), representing a decline of 82%.
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Interim dividend of 9 Hong Kong cents per share, payable on or about Friday, September 22, 2023
Vic Cheung, Manager Kerry Logistics Network Managersaid: “During the first half of 2023, global trade volume and growth remained subdued. Freight rates and volume remained depressed while supply chain demand remained stagnant. In the three years ended December 31, 2022, KLN Group’s flexible and innovative supply chain solutions enabled it to benefit from the supply and demand mismatch during the pandemic and achieved exceptional results. good. However, the extraordinary circumstances of 2021 and 2022 proved to be an anomaly that skewed year-on-year comparisons for logistics companies, including KLN Group. After a particularly difficult first quarter of 2023, the Group’s overall performance has reached a low point. Although the Group’s core net profit was down 85% year-on-year, performance in the second quarter of 2023 saw growth of more than 30% quarter-on-quarter. its unique position in Asia should allow it to weather the storm in 2023.”
Integrated logistics
Overall IL activities remained stable in the first half of 2023. Economic activities in Asia have gradually resumed, with the Group’s IL activities in mainland China and at the Kerry Siam seaport in Thailand recording satisfactory results. Still, the Group’s IT business in Hong Kong has not seen commensurate growth due to a sharp decline in demand for pandemic-related services. Nevertheless, activity in Hong Kong should improve thanks to the economic reopening, the new rebound in retail sales and the acquisition of new customers.
E-commerce and Express
While the E&E division continued to post a segment loss, Kerry Express Thailand, the main contributor to the E&E business, is expected to stabilize in the fourth quarter of 2024. On July 25, 2023, KLN Group announced the transfer of certain companies active in express delivery services in the Asia-Pacific region and Europe to an indirect wholly-owned subsidiary of SF Holding with the aim of gradually reorienting itself towards the expansion of the main businesses of the IL and IFF group. activities, as well as to create greater synergies with SF Holding.
International Freight Shipping
The IFF division reported an 82% drop in its segment profit in the first half of 2023, mainly due to weak global demand, a slower-than-expected recovery in Asian exports and falling freight rates. As the global logistics market continues to normalize and return to pre-pandemic levels, air and ocean freight rates have declined since the third quarter of 2022 compared to all-time highs in 2021, leading to a further contraction in the profit margin compared to that of the corresponding period in 2021. 2022.
The transpacific trade lane remains the largest contributor to the Group’s IFF division, accounting for over 80% of business. Although volume in this business lane was down 22%, the decline in the Group’s IFF business was comparatively smaller, due to the Group’s scale in this business lane and its determination to maintain volume and retain customers within the limits of its profit margin. Therefore, it is expected that when the market recovers, the IFF Division is likely to outperform the market.
Vic Cheung concluded, “2023 is shaping up to be a tough year for the global logistics industry. Still, the extreme pandemic-related circumstances are gradually fading in the global logistics business and there are signs of improvement in both freight rates and volumes in the KLN Group business. key markets. Using the pre-pandemic fiscal year 2019 as a baseline, we are confident that we can generate healthy and sustainable growth in the compound annual growth rate (CAGR) of segment earnings from our IL and IFF divisions. We are also optimistic that the stable performance of the IT business should continue its momentum in the second half of 2023. Within the E&E segment, Kerry Express Thailand is expected to stabilize in the fourth quarter of 2024. Throughout the pandemic, the KLN Group has continuously and consistently supported our customers with flexible alternatives and ad hoc solutions. The Group’s unwavering commitment to serving its customers well in unprecedented market conditions has strengthened customer confidence in the Group, which will enable us to seize opportunities when the market recovers.
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