Expolanka sees tougher conditions as December profits fall

Diversified freight and logistics firm, Expolanka Holdings PLC, saw its December quarter (3Q17) performance being hampered through the “challenges arising from constrained returns from passive investments combined with the impact of a drop in exchange gains”, the interim report filed by the company said. 
As a result, the company’s earnings per share fell  to just 14 cents from 18 cents a year ago in spite of the strong growth in the top-line. 
Accordingly, the group made a net profit of Rs.274. 3 million, down 20 percent year-on-year (YoY). 

The top-line however rose by 21 percent YoY to Rs. 17.2 billion, but the above mentioned challenges wiped out ‘other incomes and gains’ significantly. 
Meanwhile, for the nine months ended in December 31, 2016, the company reported earnings per share of 36 cents, down from 49 cents earned during the same period, last year. 
The revenue however topped Rs.48.3 billion, up 15 percent YoY, largely supported by the group’s core logistics business. 
But the company said even this business segment saw some headwinds such as reduced demand and increased pressure on margins. 
Expolanka saw increases in the United States trade lane as a result of Thanksgiving and year-end retail sales, the company said. 
“Our strategy to become more focused, enabled us to record notable improvements in volume especially in India, Bangladesh and Sri Lanka,” said Expolanka Holdings PLC Group CEO, Hanif Yusoof in a statement accompanying interim results. 
But the group’s Far East businesses in Vietnam and Hong Kong had posted notable contributions to its bottom line, thereby helping to offset weaker performances in Middle Eastern and African markets.
The logistics business earned revenue of Rs.41 billion for the nine months, increasing 15 percent YoY but the after-tax profit remained unchanged at Rs.1.26 billion.
Expolanka group which had interest in multiple areas such as food, education had been trimming those exposures during the last three years to focus on its core business of logistics.
Last July, the company exited from its food business by selling its 50 percent held in the Norfolk Foods Private Limited to CPF Investments Limited for US $ 2.5 million. 
Meanwhile, the group’s leisure business increased its after-tax profits by 28 percent YoY to Rs.152.3 million on a revenue of Rs.4.2 billion, up 47 percent YoY largely due to the increase in outbound business. 
In November last year, the company said it was seeking an exit from the Indian outbound market due to continued pressure on margins as the costs were rising fast. 
The group ventures however saw their net losses expanding to Rs.469.3 million from a loss of Rs.151 million a year ago due to the write down in passive investments negatively affecting profitability. 
Expolanka said it will be continuing to seek options of divesting from such ventures in a manner capable of delivering maximum shareholder value.
Japan’s SG Holdings Global Pte. Ltd held 67.48 percent stake in Expolanka as at December 31, 2016.