Net profit at Kintetsu World Express crashed 71.6 percent year-over-year in the first half of fiscal 2016 to 1.18 billion yen ($11.1 million), even as group revenue surged by a whopping 38.1 percent.
KWE did not provide a clear explanation for the profit crash and revenue surge, or much detail on APL Logistics’ financial performance, but it is clear that KWE’s acquisition of APL Logistics last year is responsible for the fluctuations in revenue and profit.
APL Logistics’ revenue totaled 86.5 billion yen in the first half of the current fiscal year, more than the 63 billion yen increase in KWE’s overall revenue growth. At the same time, APL Logistics’ operating loss of 2.42 billion yen made a big dent in KWE’s net profit.
KWE blamed APL Logistics’ operating loss on “costs for enhancement of business base and goodwill amortization associated with the separation from the former parent company.” Before the goodwill amortization, APLL had a positive operating income of 666 million yen.
Revenue at KWE was 227 billion yen in April to September, up 63 billion yen from 164 billion yen in the same six-month period of 2015.
APL Logistics' auto-related logistics services were generally firm, but its logistics services related to retail, consumer goods, and high technology were sluggish as a whole. The subsidiary’s sea cargo transportation also slumped, KWE said.
KWE acquired APL Logistics for $1.2 billion in 2015 as part of its efforts to better compete with US and European rivals globally.
KWE’s domestic revenue fell 3.8 percent in the first half of fiscal year 2016 from a year earlier to 52.8 billion yen.
Overseas revenues also shrank sharply in all regions, with that in the Americas plunging 24.7 percent to 20.4 billion yen as revenue in Southeast Asia plummeted 10.4 percent to 21.4 billion yen. Meanwhile, Revenue in East Asia outside of Japan and Oceania dived 20.4 percent to 36.3 billion yen and revenue in Europe, the Middle East, and Africa tumbled 21.1 percent to 14 billion yen.
KWE left unchanged its group revenue and profit forecasts for fiscal 2016. The firm’s full-year projections are: 481 billion yen in revenue, up 14.5 percent from fiscal 2015 and 7 billion yen in net profit, down 28.4 percent from fiscal 2015.
Contact Hisane Masaki at email@example.com.
Correction: An earlier version of this story omitted APLL's positive operating income before the goodwill amortization.