Expolanka sees moderation in business volumes as global trade slows down

• Revenue down 54% to Rs.94 bn in 3Q as freight rates normalise 

Logistics business at Expolanka Holdings PLC continued to moderate from the pandemic era surge which created supply chain upheavals sending freight rates to exponential levels as the company’s performance provided a bellwether for the global economy and trade. 

The company is now seeing its business volumes returning to normal levels in both air and ocean products with the slowdown in global trade impacted by high inventory levels, inflationary fears and disruptions in global energy markets, especially in the early days of the Russia – Ukraine conflict last year. 

The global consumption demand is slowing and businesses are cutting spending in response to the synchronised increase in interest rates by global central banks to combat the decades-high inflation.
In this backdrop, Expolanka reported revenues of Rs.94.28 billion for the October – December quarter (3Q23) compared to Rs.204.95 billion in the same period in 2021, registering a 54.0 percent slump.
The company’s share closed Rs.5.00 or 2.68 percent higher on Friday at Rs.191.75.

Expolanka swung to the forefront in the investor radar since the beginning of the pandemic in 2020 amid the surge in global goods trade originated as a result of the elevated demand conditions after record stimulus and pandemic related shipping and other supply chain bottlenecks. 
Investors flocked to its shares, sending its price to a high point of Rs.405 in the March quarter last year, before coming down with the stock market crash in the following quarter and the general moderation in the business performance. 

“Your company consolidated progress on the ocean freight product focusing on increased customer penetration, developing partner networks and enhanced competencies. Ocean rates remain tempered during the quarter with corrections in yields,” said Expolanka CEO Hanif Yussof. 
“The challenging market conditions had a relatively larger impact on the air freight business, which saw weakening demand and reduced volumes,” he added.

He further said the North American trade lane remained a critical business driver for the company while the European and intra-Asia companies remained resilient. 
And he further said that the company has made inroads into domestic services in its core markets. 

The company reported earnings of Rs.1.54 a share or Rs.2.99 billion for the quarter under review compared to earnings of Rs.11.79 a share or Rs.23.04 billion in the year earlier period.  For the nine months through December 2022, the company reported earnings of Rs. 16.48 a share or Rs.32.12 billion compared to Rs.21.20 a share or Rs.41.39 billion in the corresponding period in 2021. 

Meanwhile, Expolanka said its leisure business built momentum in the quarter with healthy financial performance while its investments division which is led by export operations delivered after tax profits for the nine months. 
Japan’s SG Holdings during the quarter increased its stake in Expolanka to 82.43 percent from 79.47 percent contributing much to the net foreign inflows seen to the Colombo Stock Exchange last year.