Wiseway Group revealed in its half year results (1H20) that sea freight is up 289 per cent from previous corresponding period (pcp).
Imports were up 170 per cent from pcp and also perishables were up 97 per cent pcp, increasing gross profit by 12 per cent from $10.1 million to $11.3 million in 1H20.
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.
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.
Roger Tong, Chief Executive Officer of Wiseway said the company has expanded the business platform in order to diversify income.
“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,” he said.
“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,” Roger said.
“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.”
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.
A more constrained and competitive environment has seen customers switch from premium air freight services to lower cost sea services.
Operating expenses for the half were $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.
During 1H20 Wiseway increased its operational footprint through leveraging its national road transportation network that operates between all major Australian cities, and a strategic partnership with Xiamen Airlines, which connects Fuzhou, Hangzhou and Xiamen to Sydney and Melbourne.
“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,” Roger said.
Following the declaration of the Coronavirus Disease 2019 (Covid-19) as a public health emergency of international concern by the World Health Organisation, flight restrictions were affected on all major passenger flights to and from China and are currently in force.
Wiseway stated that whilst this has seen interruptions to import and transport services mainly in China, as one of the major freight companies operating between Australia and China, Wiseway has leveraged its relationships with airlines, shipping lines and local trucking companies, to ensure customers’ cargo can still get into China through a combination of alternative routes.
“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,” Roger said.