Expolanka Sept. profit declines on softening trade volumes and freight rates

• Circumstances which helped company’s dramatic rise during pandemic starts to change as global economy slows down 

The revenues moderated and the profits declined at Expolanka Holdings PLC in the quarter ended in September (2Q23), capping what has been a meteoric rise in the company’s financial and share performance in the two years of the pandemic, which made it the most valued listed entity in the Colombo Stock Exchange.  
The logistics major reported a consolidated revenue of Rs.161.77 billion in the July-September quarter, which included revenues from its leisure and exports sectors, up 6.83 percent from the same period last year. 

The group reported earnings of Rs.4.63 a share on a total net profit of Rs.8.98 billion compared to earnings of Rs.6.18 a share or a net profit Rs.12.06 billion a year ago.  
Expolanka share ended at Rs.161.25 on Friday giving up Rs.4.50 or 2.71 percent after the company reported earnings, as investors reassessed if the company would be able to maintain its once stellar growth rates in the coming quarters when trade flows slow down amid rising concerns over a looming global recession. 
Since the pandemic, Expolanka share became an instant investor darling as the company stood to benefit from the massive surge in demand for physical goods around the world when the world went into lockdowns causing prolonged supply chain disruptions. 

The sharp rise in freight rates and revenues mostly earned in foreign currencies also helped the company to expand its top and bottom lines by many fold.

However, these conditions that favoured the group appear to be starting to change as it saw some softening in both freight volumes and rates as the two are coming off from a pandemic-induced surge in the previous two years to a global economic slowdown where businesses and households are seen cutting the spending. 
“Global markets remained disrupted during the quarter resulting in a slowdown. Whilst the pandemic-led demand surge has subdued, pressure on capacity has gradually eased, resulting in reduced freight rates,” stated Hanif Yusoof, Expolanka group CEO in s statement.
In the quarter under review, the logistics sector brought in Rs.159.3 billion in revenues, up 6 percent but profit after tax declined by 30 percent to Rs.8.5 billion from the same period last year. 

During the quarter, the group also expanded its network to four new markets, establishing operations in the United Kingdom with the intention of consolidating its European operations. It also made inroads into the Central America by setting up offices in Dominican Republic, Costa Rica and Mexico. 
Yusoof said its North American trade lane remained a critical business driver while European and intra-Asia trade lanes stood resilient with stable growths during the quarter. 
Meanwhile, its leisure business reported revenues of Rs.811 million, recording growth of 233 percent while the profit after tax soared 2,026 percent to Rs.243 million, reflecting turnaround performance in the aftermath of pandemic related restrictions. 

Further, the group’s investment segment, which predominantly consists of export operations, grew its revenues and profits by 85 percent ad 425 percent respectively to Rs.1.7 billion and Rs.295 million in the quarter from a year ago due to the strategy of moving on to high margin products with less volatility to market conditions.
“The IT business, too, is gaining ground with improved contributions to the group’s over- all performance,” Yusoof added. 
Japan’s SG Holdings Global Private Limited has 79.47 percent stake in Expolanka, up from 75.62 percent in June while Yusoof has 7.52 percent stake.