Expansion through M&A awaits Kerry Logistics

Business' margin expansion is on track.

Expansion through M&A should be expected from Kerry Logistics, while the business' margin expansion was noted to be on track.

According to a research report from CCB International, logistics revenue was up 11% YoY and EBIT margin rose from 9.9% in 1H13 to 10.5% in 1H14.

Hong Kong warehouse revenue was up 7% YoY while EBIT margin fell from 57.4% in 1H13 to

56.7% in 1H14.

Here’s more from CCB International:

International freight forwarding revenue was up 2% YoY and so was EBIT margin, from 2.8% in 1H13 to 2.9% in1H14.

China and SE Asia were the main drivers of earnings growth in 1H14. Hong Kong warehouse margin declined due to high labor and maintenance costs.

We expect Hong Kong warehouse margin to improve in 2H14 given its 100% occupancy rate and higher rental contracts in 1H14.

Updates on M&A - Integrated logistics major milestones

Greater China: Launched Kerry Pharma in Hong Kong; Completed logistics centres in Zhengzhou & Kunshan (729,000 sq ft); Commenced construction of logistics centre in Chengdu (592,000 sq ft); Acquired a parcel of land in Xian (273,000 sq ft).

ASEAN: Completed phase II of logistics centre in Rayong, Thailand (209,000 sq ft); Commenced construction of phase I of logistics centre in Bangna, Thailand (191,000 sq ft); Increased controlling interest in express arm to 96% in Vietnam; Acquired a parcel of land in Phnom Penh, Cambodia (site area: 6,679,000 sq ft), with 60% ownership.

International freight forwarding major milestones

Global: New global IFF system rolled out in 19 countries, including mainland China

ASEAN: Increased controlled interests in KART Malaysia and Thailand to 100%

Europe & the Americas: Restructuring operations in Europe and the Americas; Signed MOU to acquire a company in Canada

Oceania: Confirmed formation of new JVs in Australia and New Zealand

Africa: Set up a base in Senegal