Hong Kong's IDS Group first half net profit falls 4.8pc

HONG KONG's Integrated Distribution Services Group Limited (IDS) has registered a 4.8 per cent decline in first half net profit to US$18.5 million, compared to the same period last year.

The decline comes despite Asia performing strongly with a 20 per cent increase in operating profit and registering improvement in operating profit margins for all business streams. "However, sluggish performance in the US and UK negatively impacted the group's net profit performance," a company statement said.

For the six-month period ended 30 June revenue registered modest growth of 3.7 per cent to US$846.66 million. IDS attributed the slower growth in revenue to significant drops in like-to-like customer volumes, especially in the US and UK. Weaker currency exchange rates against the US dollar in ASEAN countries and the UK were also said to have affected revenues.

Asia delivered an operating profit of US$24.20 million in the first half of this year, an increase of nearly 20 per cent mainly driven by new business wins and effective cost control. Another significant achievement for IDS' businesses in Asia was the improvement in operating margins across all our business streams - logistics, distribution and manufacturing - due to stronger operating leverage.

Compared to the first half of 2008, operating margin for logistics improved from 7.1 per cent to 7.8 per cent, distribution grew from 1.9 per cent to 2.0 per cent, and manufacturing surged from 2.4 per cent to 4.3 per cent.

However, growth in Asia was more than offset by the challenging operating environment in the US and UK. After taking into account US and UK losses, corporate expenses and the $16.35 million gain from the divestment of 20 per cent interest in Slumberland Asia Pacific (SAP), the Group's operating profit for the period was $24.80 million, or 2.0 per cent above the same period last year.

"The first half of 2009 was one of the most challenging period the group has experienced so far," said IDS Group managing director Ben Chan. "The US and UK business had a disappointing first half as we can see from the sharp declines in revenue, but these are strategically important markets for IDS which will get significantly better in the second half. We remain focused to quickly turn around our operations in these markets."
(Source: www.schednet.com)