Expolanka confident despite disappointing 2Q

Expolanka Holdings PLC in a statement said it has recorded revenue of Rs. 25,305 m and PAT of Rs. 352 m for the first six months of the financial year 2014/15. For the second quarter of the same financial year, the Group posted revenue of Rs. 12,917 m and net profit of Rs. 158 m.
The recorded net profit attributable to equity holders of the Group was Rs. 134 m in comparison to the Rs. 342 m recorded during the corresponding period last year. During the quarter, the drop in growth has been mainly due to international market pressure and heavy strategic investments in key areas of the core business freight and logistics.
Expolanka Holdings PLC CEO/Group Director Hanif Yusoof said: “We focused our efforts on adopting a solution to integrate freight and logistics services to meet supply chain demands with a more strategic focus on customer needs. To this end we invested heavily in warehousing, logistics, inland transport operations and fresh talent.”
“We are positive that the changes will contribute to sustainable growth and profitability in the future,” he added.
The Group’s freight and logistics sector posted a year to date revenue of Rs. 18,103 m, recording a drop in net profit of 40%.
The North American trade lane recorded a volume contraction mainly driven by harsh weather conditions experienced in the region. Excess demand for carrier space across markets caused a yield contraction contributing to the overall drop. The increase in the terminal handling charges affected the margins of sea freight in Sri Lanka.
Despite the volume growth, the Indian market has recorded a drop in yields due to market pressure. However, the Group succeeded in containing excessive cost in India. Cost increase in air freight due to heavy demand caused a yield contraction in the Sri Lankan market.
Nevertheless, the growth in trade volume across Europe and the growth in the Intra-Asia region bodes well for the future prospects of the sector. Indonesia performed exceptionally well while the performance in China revealed a healthy growth.
The travel and leisure sector recorded a year to date revenue of Rs. 1,244 m with an increase of 9% in comparison to the corresponding period of last year. The net profit of the sector grew by 10%.
The international trading and manufacturing sector recorded a year to date revenue of Rs. 5,526 m whilst posting a net profit drop of 29%.
The tea subsector was negatively affected by the continued unrest in the Middle East which is the largest market for business and this has considerably impacted the sector financials. The company is currently adopting a low risk strategy given the current context in these markets.
This sector is currently under review for restructuring as well as possible divestments of underperforming businesses.
Yusoof further revealed: “In view of the ongoing strategic integration of freight and logistics services as well as the planned restructure of several businesses in the international trading and manufacturing sector we expect a positive shift.”
“In the current business year, we will concentrate on business integration and long-term stability. These will be supported by the measures that have already been taken in the past months such as the Group restructure, more stringent cost management and process optimisation in working capital,” he added.

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