Expolanka Holdings revenue triples to Rs.151 bn in 2Q; net profit at Rs.12 bn

Expolanka Holdings PLC delivered its best ever financial performance in the three months to September as the group remained well positioned to make the most out of the fast recovering international trade and the freight rates, which soared to all-time highs during the quarter as a result of the snared supply chains caused by the heavy demand coming from the United States (US).   

The group more than tripled its revenues to Rs.151.4 billion in the July-September quarter from Rs.49.2 billion in the year earlier period and reported earnings of Rs.12.06 billion or Rs.6.17 a share, compared to Rs.2.32 a share or Rs.4.53 billion in the same period last year. 

For the six months to September, the group reported earnings of Rs.18.3 billion or Rs.9.38 a share on revenue of Rs.247.2 billion, up 192 percent and 190 percent respectively, from the same period last year. Expolanka share which has seen a meteoric rise closed at Rs.216.25 last Friday giving the firm a market capitalisation of a massive Rs.422.75 billion, retaining its number one spot among stock exchange listed entities. 

The highest the Expolanka share traded during the same second quarter in 2020/21 was Rs.11.60 and thereafter it consistently climbed as investors flocked to its share given its exponential upside due to the group’s significant exposure to logistics and exports.

“A record growth in volumes was witnessed across both air freight and ocean freight products, which has paved the way for the logistics sector to deliver its best ever quarter whilst optimising performance on the back of gradual recovery in global trade,” said Hanif Yusoof, Expolanka Holdings Chief Executive Officer. “The industry continued to experience demand, supply imbalances due to growth in US retail sales together with reduced belly capacity which were further stretched due to disruptions in the ocean freight vertical. This has resulted in freight rates across air & ocean products remain at elevated levels, where the industry witnessed all time high rates during the quarter,” he added.

Reflecting this condition, the group’s cost of sales rose by as much as 434 percent to Rs.128.8 billion in the three months from a year ago. 

The stronger than expected pent-up demand and virus related interruptions into production capacity in key producing regions in Asia caused supply chains to snarl, ports to become congested, ships to delay, all adding to higher shipping costs and thereby soaring global commodities prices witnessed around the world.  “Your company was able to adopt proactive procurement strategies, whilst building origin capabilities, which enabled the company to secure capacity and generate healthy yields. Furthermore, your company carried out several charter operations during the quarter, further evidence our agile and flexible operating capability,” Yusoof said. 

As Expolanka continued to add more financial heft, it went on a mini shopping spree by acquiring two US-based companies in August and September respectively gaining its foothold in the Central and North American markets. 
The company in August paid Rs.2.4 billion to purchase 100 percent stake in IDEA Global LLC and its subsidiaries, a US headquartered Central American freight forwarding, warehousing and trucking services company. 

In September, the company paid Rs.1.23 billion for the full stake in Complete Transport LLC, a US-based bonded CFS and trucking company.  With the two acquisitions, Expolanka now has its presence in 32 countries and generates a substantial business in the North American market at present. While the outlook for the North American market remains steady in the next several months, Expolanka expects the European and Asian markets to re-open gradually. 

“A key initiative in this quarter was building origin capabilities, and significant effort was expended in developing infrastructure and knowhow in these markets,” Yusoof said. 

“Origins such as Sri Lanka, India, Vietnam, China have performed remarkably well, whilst new markets such as Malaysia and Thailand have seen significant growth in business, an endorsement of the company’s regional expansion plans,” he added.  By September end, Japan-based SG Holdings Global Pvt. Ltd held 75.62 percent stake in Expolanka, while Yusoof held 7.52 percent stake being the company’s second single largest shareholder.