Logistics and warehouse supplier, Expolanka Holdings PLC, saw its profits for the June quarter being adversely affected by the pressure on yields in certain key trade lanes and the losses made by the group’s other investments.
According to the interim financial accounts for the April-June quarter (1Q18), the Expolanka group made a net profit of Rs.252.9 million, down from the profit of Rs.272.4 million reported for the same period last year. The earnings per share however rose to 10 cents from 9 cents a year earlier due to lower minority shareholding. The top line rose by 6.0 percent year-on-year (YoY) to Rs.15.9 billion on volume growth in the group’s main business
However, this volume growth recorded in both air and ocean export products failed to help prop up the group’s bottom line as the “pressure on yields globally continued to effect the overall profitability of the sector”, specially in the Far East and South
“From an overall perspective, maintaining margins remain a constant challenge as pressure on yields continues to remain,” said Expolanka Group Chief Executive Hanif Yusoof in an earnings release. The group’s gross profit was down by 4.0 percent YoY to Rs.2.7 billion. Expolanka’s logistics business increased its revenues by 18 percent YoY to Rs.14.6 billion but the operating profit dropped by 10 percent YoY to Rs.446.3 million. The segment’s after tax profit fell by 18 percent YoY to Rs.321.3 million. The group profit was also hampered by the continuing loss-making investments, which mostly consist of noncore businesses.
The group investment unit made an after tax loss of Rs.127.5 million, albeit lower than Rs.163.6 million loss incurred during the same period last year. Since Japan’s SG Holdings Global Pte. Limited bought a 67.48 percent stake in the group, Expolanka has been trimming its interests in non-core businesses such as food, education and others to concentrate and build on its core business of logistics. “Our continued focus enabled the logistics sector to deliver volume growth across both air export and ocean export products. The air export vertical grew by 18 percent in line with the trend seen over the last several years. The renewed efforts on ocean export operation too have resulted in a volume growth of 36 percent,” Yusoof added. The company said it would continue to look for opportunities to exit from the remaining passive investments made by the group. Meanwhile, the group’s leisure business saw its revenues falling sharply from Rs.1.4 billion to just Rs.304.6 million for the quarter but the bottom line was up by 27 percent on year to Rs.59.2 million.
The slump in revenue could be attributed to the divestment of Akquasun, a destination management company focused on the Indian market. Expolanka last year said it was seeking an exit from the Indian outbound business due to tough margins. During 1Q18, Barca Global Master Fund and Matthews Emerging Asia Fund had increased their stakes slightly to 7.1 percent and 3.8 percent, respectively being the third and fourth largest shareholders of the Expolanka group.