Expolanka Holdings pivots inward to navigate profits to losses transition

Amid a slowdown in global trade and the easing of pandemic-related disruptions, Expolanka Holdings PLC is shifting its focus inward to streamline costs and enhance operational efficiencies. 
After a period of aggressive acquisitions, the company is now seeking to optimise its internal operations due to a moderation in revenues and a transition from profits to losses.

The logistics behemoth reported a revenue of Rs.55.51 billion for the three months ended June 2023, its first fiscal quarter, compared to a revenue of Rs.235.18 billion in the same period last year- when the company was still riding on the tail end of the higher freight rates and supply chains disruptions getting resolved. 
Expolanka group reported a net loss of Rs.5.69 billion or Rs.2.91 a share for the April – June 2023 quarter, compared to a profit of Rs.20.15 billion or Rs.10.31 a share in the same period last year. 

As the global economy experiences a slowdown and trade inflows soften, the company is witnessing a sharp decline in its pandemic-era performance. This challenging situation is compelling the management to prioritize the search for enhanced efficiencies to navigate through these times.
“Pandemic-induced demand and supply chain disruptions had resulted in inventory overstocking, with many retailers having elevated inventory ratios. This has resulted in low retail orders, which in turn have impacted EFL’s volumes across both air & ocean portfolios,” Expolanka Group CEO Hanif Yusoof said.
Expolanka share gave up Rs.3.50 or 2.44 percent to close at Rs.139.75 on Friday when the interim results were released.  

This year, freight capacity has shifted dramatically from being scarce to now being in excess as supply chains become unclogged and demand and supply conditions return to parity after the imbalances caused by the pandemic era, freight rates have experienced a sharp decline.
“Imports to our key market, North America declined by 20 percent during the reporting period. This reduction was visible across all key industry verticals and particularly amongst the consumer retail industry,” he added. 
The North American and the European consumer is pushing back on higher prices due to red-hot inflation, causing some softening in demand but the still solid jobs and wage growth are keeping the economies humming preventing them from falling into a recession. 

The commentary from Yusoof sounds that the company is now coming into grips with the normal trade conditions in the post-pandemic economic order and thus the focus is now shifting towards finding efficiencies within the business to drive long term durable profitability. 
“The recent acquisitions made in the latter part of the previous financial year have performed to expectations. Several integration initiatives have been undertaken to benefit from these acquisitions and integrate into EFL Global,” he said. 

“Whilst focus will remain on growing volumes & maintaining yields, the company will continue to evaluate operational efficiencies and cost optimization initiatives,” he added. 
Japan’s SG Holdings owns 82.43 percent in Expolanka.