Press Articles

News Straits Times - GDEX expects to maintain double-digit profit growth

Oct 29, 2007

( Kang Siew Li )

LOCAL air express company GD Express Carrier Bhd (GDEX) expects to maintain its double-digit net profit and revenue growth momentum in its current fiscal year on the back of cost reduction and improved processes.

It posted a 71.7 per cent jump in net profit to RM2.1 million, while revenue increased by 25.1 per cent to RM57.4 million for its fiscal year ended June 30 2007, compared with the previous year.

GDEX executive deputy chairman and chief executive officer Teong Teck Lean said the better results are mainly due to the investments it has made over the last two years in its facility in Petaling Jaya, which has improved its operation and efficiency and enabled it to handle higher business volume.

"We will continue to improve and automate our processes to stem rising costs such as fuel and toll roads and to meet increasing market demands for better quality, faster delivery and better tracking ability," he told Business Times.

The facility currently is consignments per year, but the Mesdaq-listed company aims to increase capacity to 300 million consignments per year.

Teong said the drive to increase its handling capacity follows an emerging trend where many companies or financial institutions are merging with each other to create even larger entities and "whatever decisions that these companies take may make or break air express players like our selves".

"A lot of them would dictate the price that they want to pay, which is always for a lower price. So, much depends on how we can restructure ourselves in such a way to service these huge clients," he added.

He said this year, all of the departments have been asked to think out-of-the-box to further reduce the error rate when sending a consignment in its efforts to improve customer experience.

GDEX has also allocated about RM4 million to RM5 million for the current fiscal year semi-automating its express distribution system, which effectively reduce headcount and errors that cause a misrouting of consignments by half.

"Part of the budget will also be used to upgrade some of our branches and key processes and buy new trucks in order to meet both immediate and future needs," said Teong.

The company plans to order 40 new trucks to replace 20 aging trucks as well as to expand its fleet of 220 trucks.

Meanwhile, Teong said the local express delivery industry has not really seen consolidation for the last two years because the market has plenty of room for growth.

Malaysia's RM1 billion air express industry is still in its infancy, with foreign players capturing a 70 per cent market share.

"Some of the (local) air express companies are growing and that is good news for the industry. As fuel and operation costs continue to rise, a lot of companies will turn to third party logistics solution (3PL) providers like us to outsource their non-core functions to reduce the escalating supply chain management cost".

"For GDEX's part, the things that we have been doing are to ensure that we get our share of growth," said Teong.

Air express accounts for 75 per cent of GDEX's revenue and the remaining 25 per cent from customised logistics solutions.