SINGAPORE (Jan 12): GKE Corporation, the logistics solutions provider, reported 2Q losses widened to $7.9 million from $0.6 million a year ago.
This was mainly due to the $6.2 million provision for impairment loss in the joint venture for the liquefied gas carrier vessel and the share of loss of joint venture amounting to $0.6 million as the chartering rate for the vessel was renewed at a significantly lower level in 2Q18 than in 2Q17.
In 2Q18, the group registered 51.8% revenue growth to $18.1 million from $11.9 million in 2Q17. Higher revenue contributions by the group’s subsidiaries, Marquis Services, TNS Ocean Lines (S), and Wuzhou Xing Jian Readymix Co. boosted the topline while the redeveloped warehouse cum office property at 39 Benoi Road only started to contribute in late 2017.
Gross profit grew on the back of higher revenue, which increased by 64.6% to $3.0 million from $1.8 million. Composite gross margin rose to 16.3% from 15.0%.
In tandem with the addition of TNS and the ramped-up production in Wuzhou Xing Jian, staff costs and marketing and distribution expenses also saw an increase.
Total operating expenses surged to $9.5 million in 2Q18 from $2.3 million in 2Q17, mainly due to the impairment loss in the liquefied gas carrier joint venture.
Finance costs increased to $0.4 million from $0.3 million with the incremental financing cost incurred by TNS and Wuzhou Xing Jian.
With the redevelopment of the 39 Benoi Road warehouse cum office property has been completed, the group began managing the storage space in late 2017.
Looking ahead, the group will be seeking shareholders’ approval in the upcoming extraordinary general meeting, for the proposed divestment of its 50% stake in the joint venture, Ocean Latitude Limited, which owns the liquefied gas carrier vessel.
In late December 2017, the group also invested in a joint venture, G-Chem Logistics to carry out hazardous chemicals warehousing and logistics services.
The group believes that the horizontal expansion within the specialised chemicals space will augment growth in its core warehousing and logistics business.
Shares in GKE closed at 11 cents on Friday.