Hong Kong, 15 March 2010 - Integrated Distribution Services Group Limited ("the Group" or "IDS"; SEHK: 2387), an integrated distribution and logistics services provider, today announced its annual results for the year ended 31 December 2009. Despite the challenging economic environment, the Group recorded strong results backed by robust performance in Asia. Profit attributable to shareholders for 2009 was a record US$29.83 million, 21.6% above the US$24.52 million registered in 2008.

Basic earnings per share for the period were 9.35 US cents (equivalent to 72.48 HK cents), compared to 7.76 US cents (approximately 60.39 HK cents) in 2008. The Board of Directors has recommended a final dividend of 30 HK cents per share. Together with an interim dividend of 14 HK cents per share, the total dividend for 2009 amounts to 44 HK cents per share, 22.2% above the 36 HK cents declared in 2008.

As a result of the global economic crisis, customers in the US, UK and including some in Asia showed year-on-year declines in business volume. However, the Group was able to bridge this gap through new business wins to deliver a 7.0% growth in revenue, up from US$1.68 billion in 2008 to US$1.80 billion in 2009. As a result of effective cost control and improved efficiency, core operating profit grew much faster at 20.4%, from US$20.97 million in 2008 to US$25.25 million in 2009. Operating profit for 2009, after taking into account the gains from the disposal of Slumberland shares, the sale of a Malaysian property and other one-off items, showed 31.4% year-on-year growth to US$45.50 million.

"I am pleased to report that IDS performed commendably in 2009 amid a period of turbulence and uncertainty. In spite of revenues increasing only 7%, our core operating profit and net profit increased by 20.4% and 21.6% respectively," said Mr. Ben Chang, Group Managing Director of the IDS Group. "Growth in Asia continues to be robust, and China remains our fastest-growing market amongst IDS' key geographies. It is particularly encouraging to see improvement in operating margins across all our business streams in Asia. This demonstrates our strong operating leverage and enhanced efficiency."

IDS' Asia operations delivered outstanding performance in 2009. Operating profit grew 25.5% to US$53.69 million against 2008. All key markets including China, Hong Kong, Thailand and Malaysia continued to perform strongly, whilst the successful turnaround of Indonesia and tremendous growth in Taiwan also made positive contributions. IDS' growth story in Asia is even more spectacular in terms of its margin improvement. The margin for Logistics in Asia reached a record high of 8.23% in 2009 compared to 7.95% in 2008. Distribution margin substantially improved from 1.64% in 2008 to 2.10% in 2009, while Manufacturing increased from 3.03% in 2008 to 4.12% in 2009.

During the year, IDS completed several modest but strategically important acquisitions in Asia that either complement its existing business or provide an entry into a new geography or service segment. These included a freight forwarding company with a strong Asia-US network, a medical equipment distributor in Sabah, a logistics company in Indonesia, and the Asian operations of Roots - a Canadian lifestyle fashion brand - which will enable the Group to begin wholesaling apparel and accessories in Asia. These opportunities are expected to become key growth drivers for IDS in the Group's next Strategic Plan cycle 2011-2013.

"Entry into the Asian wholesaling of apparel and accessories is a natural extension of our Asian distribution business into a new product segment beyond FMCG and Healthcare products. It also leverages our expertise in apparel logistics in the region," said Mr. Joseph Phi, President of IDS. "The freight forwarding business will substantially strengthen the service offerings under the International business stream and our proposition of providing end-to-end global logistics solutions."

IDS also enjoyed a remarkable year on the business development front in 2009. Several significant new contracts were signed with new and existing customers, including major multinationals such as Colgate-Palmolive and Friesland-Campina in Hong Kong, F&N in Malaysia, Disposable Soft Goods (DSG) in Malaysia and Thailand, and Muji for a regional hubbing operation in China.

Operations Review

GREATER CHINA
The Greater China region reported solid revenue and operating profit growth of 26.8% and 34.0%, respectively against 2008. China continued to be the key driver, delivering 27.6% year-on-year growth in operating profit. Hong Kong also registered steady operating profit growth of 15.5%. With the inclusion of the Shell distribution contract and the acquisition of the Roots business, profit from Taiwan more than tripled in 2009 compared to 2008.

IDS' China distribution business continued to register a significant year-on-year revenue growth of over 30%. This was primarily driven by the outstanding growth of FMCG products and the ongoing expansion of the Group's China distribution network, which is continuing in 2010 with significant investments in people, technology and full-fledged regional offices. The China healthcare distribution service launched last year has also made good progress. Major new principals served by IDS included Rottapharm/ Madaus Pharmaceutical, Mircus Endovascular Inc. and Jamieson Laboratories. IDS has now established an entry foundation in the Ethical Pharmaceutical, OTC Healthcare and Medical Device sectors.

The Logistics team in China signed up 20 new customers in 2009-a record at IDS-including Remy Cointreau, Nivea, Mango, B Braun, Zeiss and Maxxium. The logistics footprint of IDS in China expanded by 20% to accommodate the new businesses, and the total floor area of the distribution centers now exceeds 2 million square feet.

"Our growth in China has been outstanding. Operating profit has increased more than 18 times between 2004 and 2009, representing a compound annual growth rate of over 80% per annum," said Mr. Phi. "Going forward, we will implement a new China organization that merges the Hong Kong operations into China, thereby combining the management strength of our two strongest markets to prepare for our next quantum leap in this all important region."

ASEAN
Despite a slight 2.4% decline in revenue due to weaker currencies against the US dollar, operating profit in the ASEAN region registered growth of 17.8% in 2009 compared to 2008, reflecting strong operating leverage. Thailand registered an impressive 22% growth in operating profit against a flat revenue performance, whilst the Indonesia operation completed a successful turnaround through strengthened management and improved operational efficiency.

New healthcare facilities were completed in Singapore and Thailand in late 2009. Both facilities have multiple temperature-controlled storage areas and packing facilities designed according to GDP (Good Distribution Practice) standard. The facilities are also fully RF (Radio Frequency) enabled and are equipped with flow racks and conveyor systems to enhance productivity. Another similar facility will be opened in Malaysia in 2010. The new facilities are expected to position IDS as the leading distributor of healthcare products in the region.

The Listerine plant in Thailand continues to grow from strength to strength. During the year the plant commenced production of orders from Japan and Australia. The dedicated facility for Fisherman's Friend in Malaysia is currently supplying Singapore and Vietnam, with confirmation to include Malaysia, Australia and Hong Kong in 2010 and subsequently other Asia Pacific countries. Groundbreaking for a facility in Malaysia dedicated to producing dairy products for F&N took place in September 2009. The plant is expected to be completed in mid-2010, and commercial production will commence in the second half. This is an exciting project for IDS as it will extend our manufacturing capability to cover chilled products.

US & UK
Suffering from continued softness in market sentiment, and in spite of more volume throughput from Li & Fung USA and Marks & Spencer (M&S) UK, revenue for both the US & UK markets declined significantly by 27.2% against the previous year. Despite savings realized from cost-control initiatives that the Group implemented in 2008, both countries recorded an operating loss of nearly US$13 million in 2009, compared to a loss of US$7.57 million in 2008. Business development efforts, cost-cutting measures and rationalization programs instituted over the past year are expected to yield a turnaround in these countries in 2010.

"I am confident that the worst is behind us in the US & UK," said Mr. Chang. "The healthy recovery in the UK is encouraging, and we are seeing strong signs that the operation is on track towards profitability. Although the results in the US were disappointing, we saw significant upsides in our increased collaboration with Li & Fung and in our cost-saving initiatives. This will benefit financial performance in 2010, which is trending positively. More aggressive business development efforts will yield larger volume throughput in both markets, filling up excess mothball facilities and capacities that affected us significantly in 2009."

The rationalization program for distribution centers in the US continued in 2009 with the closure of two facilities. Negotiations with landlords, temporary labor agencies and equipment providers took place for the purpose of obtaining rate reductions. More aggressive cost-control measures, including headcount and salary reductions, as well as initiatives to reduce travel and communications expenses were introduced to ensure that the cost base for the US operation in 2010 is in line with business volume projections.

IDS commenced the design and fit-out of a new 650,000-square-foot facility on the West Coast in 2009 to consolidate various Li & Fung USA operations. Targeted to be completed by mid-2010, the facility will be equipped with an automated sortation system and high-velocity carton pick module to ensure an efficient product flow.

The UK operation successfully turned around in the second half of 2009 through strengthened partnership with M&S and effective cost control. IDS is now one of the four approved UK service providers for M&S and a member of the M&S High Performance Team.

2009: A Solid 10th Anniversary Year for IDS
IDS also celebrated its 10th Anniversary in 2009 with a wonderful array of celebratory activities involving all IDS employees, their family members and business partners.

"2009 is also going to be remembered as a significant year at IDS," said Mr. Chang. "The signature activity was the series of family days held across the Group that involved a total of over 20,000 employees and their families. The gala dinner in December that concluded the year-long celebration was magnificent and left behind many good memories."

The current year will be the final year for IDS' 2008-2010 Strategic Plan cycle. The Group intends to capitalize on the rebound in the second half of 2009 to champion strong growth as it completes the cycle.

"IDS enjoyed a period of consistent, solid growth from the time of our public listing in 2004 through 2007, with a compound annual growth rate of 38% per annum in net profit. Then we suffered a setback in 2008 with the onset of the global financial crisis. Based on the strong recovery we saw in 2009, the rallying cry for the Group in 2010 is "Back to Stellar Growth!" to remind us of the strong foundation we plan on building to support the stellar growth we expect in the Group's next 2011-2013 Strategic Plan," concluded Mr. Chang.

About Integrated Distribution Services Group Limited
Integrated Distribution Services Group Limited ("IDS Group") is a leading integrated distribution and logistics services provider specializing in Value-Chain Logistics. Using Logistics as its fundamental enabler, IDS offers a full menu of services covering distribution, logistics and manufacturing to a wide spectrum of customers in the consumer, healthcare, footwear & apparel, retail and garment industries. Headquartered in Hong Kong, the IDS Group has an extensive logistics and distribution network in Greater China, ASEAN countries, the US and UK, offering customized services to over 400 customers including an array of multinational brands. The IDS Group is a member of the Li & Fung Group.

For further enquiries, please contact:
Golin/Harris International Limited

Sue So	Madison Wai
Tel: (852) 2501 7984	Tel: (852) 2501 7903 / 9306 1632
Email: sue.so@golinharris.com	Email: madison.wai@golinharris.com

© Copyright 1996-2023 irasia.com Ltd. All rights reserved.

DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any information provided on this website. Under no circumstances shall irasia.com Ltd be liable for damages resulting from the use of the information provided on this website. TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website.