Freight Management sees 10% growth in FY18 profit

This article first appeared in The Edge Financial Daily, on November 30, 2017.
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SHAH ALAM: Freight Management Holdings Bhd, which posted a 13% year-on-year rise in net profit for the first quarter ended Sept 30, 2017 (1QFY18) yesterday, is targeting an average growth of 10% in net profit and freight volume for the full FY18.

Managing director Chew Chong Keat said the multi-modal freight and total logistics services provider is upbeat about its prospects amid improving growth in global trade and increasing manufacturing activities in the country.

On the international front, he sees potential for substantial growth from the Philippine, Indonesia and Vietnam markets.

“There is no such thing as saturation in the market as there are no more avenues to grow. There will always be customers who are looking for improvements in service. We just have to take advantage of our strength to gain market share,” Chew told reporters after the group’s annual general meeting here yesterday.

The group’s freight volume stood at 113,200 20-foot equivalent units (TEUs) of containers in FY17, compared with over 10 million TEUs that pass through Port Klang every year, he shared.

The sea freight segment will remain the group’s core business. “We have always been very strong in our sea freight segment, so it’s only natural that we try to keep building and growing this particular segment.”

On the group’s e-commerce segment under 65%-owned FM Hubwire Sdn Bhd, Chew said although there is an opportunity to grow, the loss-making business remains a challenge as it is a relatively new area for the group.

“We started this about a year ago, but honestly the business has not really gained traction. We are exploring ways to boost the business. Although it may take a while, if we don’t get involved now it will be too late later. It is a challenge now, but we have the resources [to sustain it],” he said. The group, he added, hopes to see some traction in the business by end-FY18, and to turn a profit by FY19.

In 1QFY18, Freight Management’s net profit rose to RM5.93 million from RM5.27 million in the same quarter last year, as revenue grew 22% to RM127.72 million from RM104.77 million.

“Compared with 1QFY17, all services reported growth, other than the tug and barge service, where there was a slight decrease in revenue. Sea freight contributed the highest revenue while there was commendable growth registered in the air freight, 3PL (third-party logistics) and warehousing, and supporting services,” it said in its Bursa Malaysia filing.