Kerry Logistics Reports 10% Revenue Growth and Strong IFF Performance

Published: Tuesday, September 3, 2024

Kerry Logistics Network Limited (‘Kerry Logistics Network’ or together with its subsidiaries, the ‘Group’ or ‘KLN Group’; Stock Code 0636.HK) recently announced the Group’s interim results for the six months ended 30 June 2024.

Group’s Financial Highlights

  • Revenue* grew by 10% year-on-year to HK$25,432 million (2023 1H: HK$23,197 million)
  • Core operating profit* increased by 11% to HK$1,200 million (2023 1H: HK$1,078 million)
  • Core net profit* also increased by 5% year-on-year to HK$606 million (2023 1H: HK$575 million)
  • Profit attributable to the Shareholders for 2024 1H was HK$831 million (2023 1H: HK$368 million), which includes profit generated from discontinued operations of HK$241 million (2023 1H: loss of HK$207 million), and represents a year-on-year growth of 126%
  • Integrated Logistics (‘IL’) business recorded a segment profit* of HK$693 million (2023 1H: HK$718 million), which represents a slight drop of 3%
  • International Freight Forwarding (‘IFF’) business recorded a segment profit* of HK$740 million (2023 1H: HK$626 million), which represents a growth of 18%
  • Interim dividend of 10 HK cents per Share to be payable on or around Monday, 23 September 2024

* For continuing operations only.

Vic Cheung, Chief Executive Officer and Executive Director of Kerry Logistics Network, said, “In 2024 1H, against intensifying geopolitical turmoil and persistently high interest rates, inflation moderated to a three-year low and the global economy returned to growth after three years of slowing. An array of factors pushed ocean and air freight rates up in late 2024 Q2. Supported by its resilience and agility in providing flexible and cost-effective solutions to customers, KLN Group was able to ride the waves in this highly volatile market and recorded a 10% year-on-year growth in revenue and 5% growth in core net profit for its continuing operations 2024 1H, outperforming its international peers.”

Integrated Logistics

The Group’s IL business experienced a short-term contraction in 2024 1H, reporting a 3% drop in segment profit due to the business decline in key markets, Hong Kong and the Mainland of China, amid sluggish economic recovery and prolonged weakness in domestic demand.

The Hong Kong business recorded an 11% drop in segment profit as a result of changes in the consumption patterns of visitors and local citizens, leading to subdued local spending, particularly in the F&B sector. The decrease compared to the previous year was also due to the impact of certain pandemic-related government grants in 2023.

In the Mainland of China, the IL business recorded a 5% drop as stagnant global demand dampened manufacturing activity alongside falling retail consumption amid economic uncertainties. The IL business in the rest of Asia registered a 9% growth riding on the growth in Singapore, Vietnam, the Philippines and India, as well as the stable performance of Kerry Siam Seaport in Thailand.

International Freight Forwarding

The Group’s IFF business recorded an 18% growth in 2024 1H, supported by the growth in key markets including the US, the Mainland of China and Hong Kong.

Building on its broad customer base, competitive rates and strong capacity, KLN Group outperformed the market on the Asia-US trade routes in 2024 1H, retaining its top spot as the leading NVOCC in the world’s busiest trade lane.

The air freight business under the IFF division recorded steady volume growth during the traditional slack season, thanks to upswings in cross-border e-commerce. Positive results were also brought by the integration and collaborations with S.F. Holding including cross-selling and the joint venture formed to manage the international cargo terminal of the Ezhou Airport in Central China. Kerry Freight Controlled Network, the Group’s Trans-Pacific air freight service to connect multiple Asian locations to the US, has commenced the air charter service from Ezhou, the Mainland of China to the US in 2024 Q2 to capitalise on the growing market demands.

Vic Cheung concluded, “Despite the turbulence in the global freight market and the uncertainties of economic revival, we are optimistic about improvements in our performance for FY2024. Performance in the IFF division is expected to grow in 2024 2H riding on sustained demand, stable volume growth and higher yields in ocean freight as well as the anticipated strong results of the air freight peak season in 2024 Q4. Leveraging our unrivalled network in Asia, the most diversified global solutions and a broad customer portfolio, KLN Group is committed to capturing market opportunities wherever they might arise through prompt action amid a stormy logistics landscape.”