KUALA LUMPUR: Malaysia’s premier logistics service provider, Kontena Nasional Bhd (Kontena Nasional), has underlined regional expansion into neighbouring markets such as Thailand and Indonesia as the key driver to boost its position as an industry leader and to raise earnings.
Its chief executive officer Hood Osman said the company should expand its reach to other countries and create a link-up with businesses in those countries.
Immediate strategic link-ups with foreign parties was a crucial element in enhancing regional competitiveness, both for Kontena Nasional and for the foreign entities as well, he told Bernama.
Hood said the regional expansion plan, whether through a joint venture, acquisition or collaboration with foreign parties, would depend on the situation and Kontena Nasional’s needs at that time.
“But we are looking at partners that are almost the same size as us, then it’ll make it easier for us,” he said, adding that his company is currently in talks with five parties, three from Indonesia and two from Thailand.
He said his company was looking at the synergies, especially in land transport, and whether it would enhance the business model that it was creating currently such as total logistics and halal services as the mode of approach when identifying partners for its expansion plan.
Being a regional player, the company must place itself in areas that could generate immediate impact economically and financially, he said.
In Indonesia, he said, the company was eyeing inland services such as land transport and warehouse services, while in Thailand, it wanted to focus on port services.
“These are the two areas we think we can actually make a mark and at the same time, we can make it financially reasonable for us to establish ourselves,” Hood said.
Kontena Nasional’s regional expansion would also strengthen Malaysia’s quest to be a logistics hub, be it in the halal logistics or conventional business.
As for the company’s financial results, Hood said that it had recorded a marked decline in pre-tax profit last year due to the fleet expansion programme to replace 122 old prime movers during the year.
He said that while the company was still depending on a single business that year, like container haulage, the fleet expansion programme had a big impact on its financial performance.
Last year, Kontena Nasional’s pre-tax profit dwindled to RM1.4 million from RM9.7 million in 2009, while turnover tumbled to RM203.9 million from RM219.5 million.
So far, this year, the company has recorded improvement in the business created last year, with warehouse and logistics infrastructure showing profitability while trucking business was still in the learning stage.
Hood said he did not expect a big jump in profit but business quality created for the company to be more comfortable in an industry which did not promise big margins.
“That is why the company is expanding its services to tackle the low margins in the haulage business and actually cover it with a higher margins from the warehouse business,” he added. — Bernama