KEX Drops 5% despite a Record High of Delivery Volume in 3Q21

The share price of Kerry Express (Thailand) Public Company Limited (KEX) fell ฿1.75/share or 4.76% to ฿35.00/share at the closing of the morning session on November 11, 2021. The decline came after the 3Q21 earnings announcement last night with a declining net profit due to higher cost of sales and services.


KEX reported a net profit of 12.84 million baht in 3Q21, decreased 95.61% from a net profit of 292 million baht in 3Q20. KEX stated that this was a result of its market leadership and aggressive pricing strategies as well as investment in margins to prepare extra resources to uphold service excellence, prevent operation seizure, and build up new capacity. The company expected such aforementioned temporary expenses to gradually decline, as volume acquisition accelerates in line with the company’s strategic actions.

KEX marked the highest record of delivery volume in 3Q21, with 48% growth YoY and revenue of 5,331 million baht, increased 18.8% YoY, owing to its successful proactive marketing strategy. Revenue from all customer segments grew, especially those from the C2C segment, thanks to the successful penetration into the economy segment and social communities.

In addition, KEX has been able to secure contract renewals with its major B2B and B2C customers, laying a solid foundation for volume and revenue growth in coming quarters.


Meanwhile, costs of sales and services rose by 30.8% YoY from 3,805 million baht in 3Q20 to 4,978 million baht in line with higher delivery volume growth. Though normalized unit cost was kept in check during the quarter, KEX had to make short-term investment in its margins to prepare extra operating resources for service quality assurance during COVID-19 crisis and new capacity expansion to handle increases in volume during coming months.

The pandemic has piled operations complications on top of other challenges including global supply chain disruption, labour supply shortages and demand forecast difficulties.

Such temporary incidents have layered on more costs for KEX to establish spare resources. Such preparations include the expansion of spare operating resources including vehicles and equipment, as well as spare sorting hubs, distribution centres, and service locations nationwide.

Without advance preparation, failures in resource management and planning could result in monetary loss, service quality deficiency and brand damage. KEX stated that it expected such expenses to gradually decline as COVID-19 situation recedes and its parcel volume acquisition accelerates.