Business in the red but growth ambitions on track, Tong says
Australian-Chinese freight specialist Wiseway Logistics is confident its diversification path will help it achieve its growth ambitions and minimise coronavirus (Covid-19) trading impacts, despite recording a net loss for the first half.
The multimodal transport and logistics firm breaks down its interim results into the following:
- revenue for the half was $45.1 million, down 5 per cent or $2.2 million due to a slowing pace of growth in the Chinese economy, and some exporters’ preferences for sea freight for non-perishables to reduce costs
- direct expenses reduced by $3.4 million to $33.8 million, in response to bringing in-house the capability of security-handling shipments for outbound cargo
- gross profit was $11.3 million, up $1.2 million (12 per cent). This resulted in a gross margin of 25 per cent for the half, an improvement of 40 basis points
- operating expenses for the half of $11.2 million, up 11 per cent or $1.1 million, as the business invested in infrastructure to expand its platform and increased staffing levels to support the new service offerings
- uplift in earnings before interest, taxes, depreciation and amortisation (EBITDA) to $0.1 million saw the EBITDA margin improve to 0.23 per cent in 1H20
However, its net loss after tax was $4.9 million, up from $0.9 million over the pcp, which it says is primarily attributable to depreciation expense of $2.5 million (in line with AASB 16 standards), and income tax expense of $1.6 million.
Of its divisions, Dry Cargo (air freight) took the biggest hit, down from $44.2 to $36.6 over the pcp.
However, there were solid gains in Perishables (air freight), Sea Freight, Imports (general cargo & e-commerce), and Road Transport – albeit from much lower bases, up from $3.1 million cumulatively to $6.7 million over the pcp.
“During the half we have been transforming the business to be fit for purpose in the evolving freight market between China and Australia,” CEO Roger Tong says.
“We have expanded our business platform in order to truly diversify our income, expanding our capability to take advantage of emerging trends and growing demand.
“Export of perishables is of particular focus following Wiseway’s Australia-wide accreditation to export fruit to China.
“As well, our sea freight business gives optionality to our clients and supports our core air freight services.
“We have also expanded our services in imports; road transport services; and selling cargo space on behalf of airlines.
“We now have a national presence with bonded warehouse capability across the Australian mainland and in Auckland, New Zealand.
“Earnings for the half year were impacted by reduced air freight volumes due to the volatile macroeconomic environment and slowing economic growth.
“As a result, air freight dry cargo, was down 17 per cent, to $36.6 million for the half. However, pleasingly we have seen growth from the new business divisions more than double.
“Due to the business expansion investment in premises and people, operating costs increased. As stated in January, we have now completed all expansion projects envisioned pre-IPO.”
Wiseway has been calling for donations to deliver to China
Playing down coronavirus fears, it says revenue has actually increased more than 10 per cent since the beginning of the new calendar year on the pcp.
This is due to leveraging its relationships with airlines, shipping lines and local trucking companies, to ensure customers’ cargo can still get into China through alternative routes, Tong says.
“Our long-term cooperation with airlines, shipping lines and local trucking companies in China have enabled Wiseway to adapt quickly and utilise alternative routes and multi-transport options to meet customer demand,” Tong adds.
“During 1H20 we have achieved a number of significant milestones: a truly national bonded warehouse footprint; accreditation as an IATA Cargo Agent in New Zealand; and Australia-wide accreditation to export fruit to China (previously from only being able to export fruit from Tasmania).
“In the second half of FY20, our focus will be on growing revenue from our expanded customer base and through leveraging our multi-faceted logistics offering, and further controlling operating expenses.
“I am confident in the future of the business more than ever before.”