Monday, October 13, 2008

Century Logistics expects no immediate impact from financial meltdown

The Edge Financial Daily reports that Century Logistics Holdings Bhd does not expect the financial crisis gripping the world to have an impact on its freight forwarding business, at least in the immediate term.

Its deputy managing director Dr Mohamed Amin Kassim told The Edge Financial Daily that even if there was an impact, it would be minimal as consumers still had to spend on basic necessities such as food.

Food and beverages (F&B) companies are among Century Logistics’ biggest customers.

“I talked to some industry players — and, going forward, I think trade with the United States and Europe would slow down somewhat. Higher exchange rates have stopped the people from buying goods from them,” he said in a telephone interview.

Mohamed Amin expects Malaysia’s trade with China and India to continue to do well, as consumers would switch to lower priced goods from the two countries.

“The situation with Australia, which has invested heavily in the US, would be better because their resources are fully booked by other countries. Their trading is still going on well,” he added.

Mohamed Amin said the main concern of the industry was the reaction of banks. “Our banks might follow the step of other banks in their reluctance to give out loans,” he said.

“If they impose strict restrictions, it would be difficult for us to take out bank loans to run our businesses.”

Going forward, Mohamed Amin said Century Logistics would be cautiously watching the global scenario so as to take necessary action to prevent the worst situation from happening.

“We have strong customers, especially those from the food and beverages (F&B) sector. We would try to keep these customers,” he added.

To offset the higher fuel prices, Mohamed Amin said the company had reduced its operating costs and expanded its business into new segments.

Apart from freight forwarding, Century Logistics is also involved in transportation and distribution, warehousing as well as procurement and assembly services.

“We operate more than 300 trucks, but we only own about 180 of them. By doing that, we are able to minimise maintenance costs,” Mohamed Amin said.

For its second-quarter ended June 30, 2008, the company’s net profit dropped 57.5% to RM2.5 million from RM5.9 million a year earlier due to the dry-docking of two floating storage units and weaker market sentiment. Its revenue for the quarter fell 17.6% to RM34.1 million from RM41.4 million previously.

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