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| We are Asia's foremost integrated logistics company,
providing end-to-end supply chain management services
via physical and information technology networks.
We focus on providing supply chain solutions to
the fast moving consumer goods, healthcare, high
tech, automotive, retail and chemical/industrial
sectors. Through a strategic alliance with the world's
leading logistics group, Kuehne & Nagel, we
serve customers in the Asia-Pacific, Europe and
the United States. |
| Operations
Review | Outlook |
Operations Review
The Group’s 61.55%-owned subsidiary SembCorp
Logistics (SembLog) posted a strong growth of 193%
in net earnings to S$90.6 million. Excluding exceptional
items, net earnings showed a healthy improvement
of 35%. Profit After Tax and Minority Interest (PATMI)
grew mainly due to its key earnings driver, its
supply chain management operations. |
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| SembLog’s revenue rose 8% to S$465.4 million
driven by stronger supply chain management performance
in Singapore and China which grew 10% and 14% respectively.
Supply chain revenue contribution from other parts
of Asia-Pacific registered a marked improvement
of 67%, albeit from a low base, as a result of better
performance in Australia and Taiwan. On the other
hand, revenue from oil and gas logistics declined
6% primarily due to a lower jetty usage in the Singapore
as foreign customers stayed away because of the
severe acute respiratory syndrome (SARS) outbreak. |
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| We began operations in one of the largest and
most advanced logistics park in Shanghai in November
2003 to cope with increasing capacity demands. Located
five kilometres from the Baoshan Port, our new Shanghai
Regional Distribution Centre comprises seven warehouses
with 77,000 square metres storage space and 63,000
pallet positions. It also has temperature-controlled
facilities, advanced ventilation systems and is
able to support new technologies for different industry
clusters. Besides being able to handle a wider range
of products such as healthcare and pharmaceutical
items which require more demanding storage conditions,
the new logistics park also offers opportunities
for productivity improvements. |
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| During the year, our operations in China also
obtained the Class A Freight Forwarding Licence
which will enable it to offer a comprehensive suite
of freight forwarding and management services. |
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| The global partnership with Kuehne & Nagel
(KN) also made good progress as several joint accounts
were secured including a Lead Logistics Provider
contract for Siemens Xelibri. Going forward, SembLog
and KN are working on joint marketing to accelerate
the partnership’s growth in the Asia-Pacific
and are also pursuing a joint facility within the
free trade zone of WaiGaoQiao in Shanghai. |
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| As part of SembLog’s strategy to expand
its supply chain network in Asia, SembLog partnered
Kukbo Transportation in a 51/49 joint venture, SembCorp
Kukbo Logistics, to provide supply chain management
services in South Korea. This business began operations
in December 2003. |
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| On December 31, 2003, the acquisition of Japanese
distribution company, Footwork Express (Footwork),
by the joint venture between SembLog (30.8%) and
Orix Corporation (69.2%) was completed. The acquisition
of Footwork marked an important milestone in SembLog’s
overseas expansion not only in terms of expected
earnings contributions but also Footwork’s
nation-wide distribution network in the second most
important economy in the world as well as Footwork’s
customer base of blue-chip Japanese companies, many
of which have relocated their manufacturing activities
to China where SembLog has substantial operations. |
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| Anchored by our strong China operations and with
networks in Hong Kong, Taiwan, South Korea and Japan
in place, we see tremendous opportunities in the
North Asia region both for intra-country logistics
as well as cross-border supply chain management
services. |
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| Today, SembLog has one of the most extensive supply
chain network in the Asia-Pacific region with an
IT and physical fulfillment network that spans Singapore,
China, Hong Kong, Japan, South Korea, Taiwan, India,
Australia, Thailand, Sri Lanka, Malaysia, Myanmar
and the United Arab Emirates. |
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Outlook
Supply chain management operations in Singapore
are expected to continue to perform well with a
steady baseload of long-term contracts from the
public sector and strong commercial customer base.
China is also expected to post good growth on the
back of new accounts secured and increased volumes
from existing customers, while the Indian operations
are expected to perform better than it did in 2003. |
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| North Asia will be the next driver of SembLog’s
supply chain management earnings. Besides intra-country
logistics services, opportunities exist for cross-border
supply chain management services. We also intend
to capitalise on our customer knowledge and our
network to offer customers regional supply chain
solutions. This will enable us to optimise resources
further and hence bring greater savings to our customers. |
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| In the area of oil and gas logistics, improved
contributions from overseas operations are expected
as Thailand, China and Azerbaijan are expected to
continue to perform well and contributions from
the new offshore base in Batam, Indonesia are expected
from the second half of 2004 onwards. |
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2003 |
2002 |
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S$m |
S$m |
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Revenue |
465.4 |
430.3 |
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PATMI |
90.6 |
30.9 |
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SembCorp
Industries'
share of PATMI |
55.9 |
18.4 |
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| Note:
Figures are taken at SembCorp Logistics’ Group Level |
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| Key Facts |
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Asia’s leading integrated logistics
service provider with an extensive IT and physical
fulfillment network spanning Singapore, China, Hong
Kong, Japan, South Korea, Taiwan, Australia, Thailand,
Malaysia, India, Sri Lanka, Myanmar and the UAE |
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In global partnership with the world’s leading
logistics group, Kuehne & Nagel, to provide
end-to-end supply chain solutions on a global basis |
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One of China’s top supply chain management
companies with an in-country distribution network
that covers more than 850 locations, of which more
than 75% can be reached within 48 hours |
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One of India’s top logistics company serving
more than 500 cities |
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Manages total warehouse space of more than 8 million
square feet |
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Operates Asia’s premier offshore supply base
– Singapore Offshore Petroleum Services (SOPS)
in Singapore and regional bases in Azerbaijan, Indonesia
and Thailand |
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| Competitive
Edge |
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Unparalleled supply chain management
network in the Asia-Pacific – both an IT and
physical fulfillment network – covering Singapore,
China, Hong Kong, Japan, South Korea, Taiwan, Australia,
Thailand, Malaysia, India, Sri Lanka, Myanmar and
the UAE |
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Established track record and an in-depth
knowledge of the business environment in Asia |
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First mover advantage in China and
India |
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Extensive use of the latest advances
in IT and enabling tools such as optimisation models,
to create innovative supply chain solutions |
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Globally positioned through strategic
partnership with Kuehne & Nagel |
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