Pressure has been piling up on multiple fronts for Complete Logistic Services Bhd in recent years, but the integrated logistics player has successfully grown its bottom line despite an increasingly competitive landscape.

From a profit after tax (PAT) of RM910,000 in the financial year ended March 31, 2015 (FY2015), the company had seen its annual PAT grow at a compound annual growth rate of 12% in the subsequent three financial years. Its PAT in FY2018 was RM9.41 million.

The company’s PAT growth came despite heavy pressure on its top line, which had seen revenue dip slightly from RM127.2 million in FY2015 to RM124.02 million in FY2018.

Complete Logistic is a joint winner in The Edge Malaysia Centurion Club corporate award for highest PAT growth in the transport and logistics segment.

While the company’s logistic solutions encompass both shipping and land transport services, the latter makes up the bulk of its turnover and profit. In recent times, the company’s key challenges have revolved around rising cost components, coupled with intense competition in its business segments, which has squeezed margins.

On the land logistics side, its lorry transport business has been seeing a slowdown, as it predominantly serves the building materials segment.

“The cement players have been performing badly overall. This indirectly impacts us, as there is an oversupply of the product in the market, which has resulted in a slowdown in the business of our customers. Moreover, our operating costs have been escalating, with fuel costs, maintenance costs and payroll costs taking the larger percentage of our revenue,” the company says in its FY2018 annual report.

In the meantime, its shipping operations, which cover Peninsular Malaysia, Sabah, Sarawak and Indonesia, have not recovered since the 2008 global financial crisis.

In particular, profit margins fell by half in FY2018 despite a marginal revenue increase due to rising fuel prices and higher port charges, as the company was unable to pass on the additional cost to its customers given heavy competition.

That was made worse by the lifting of the national cabotage policy, the company says, which meant competition intensified and even led to some businesses folding.

Despite its PAT growth in the three financial years under review, the road ahead may remain bumpy for Complete Logistic. However, shareholders may take heart from the management’s track record so far.

In its FY2018 annual report, the company outlines expectations of a tough FY2019, given that many mega projects had been suspended.

“Strategically, we have begun to downsize our fleet through the disposal of older and less efficient lorries while continuing to upgrade and maintain the existing fleet. As business grows over time, we will then purchase new lorries to replace the disposed units,” it says.

The expectations and measures taken in anticipation had proved prudent in hindsight. In FY2019, which is outside the period under review, the company successfully defended and grew its PAT margin despite turnover moving sideways.

It reported PAT of RM10.69 million on revenue of RM124.1 million in FY2019, versus PAT of RM9.41 million on revenue of RM124.02 million the year before.

The wider margin was driven by stronger margins across all segments, though increased warehousing volume drove a slight increase in group revenue. While land logistics posted a stronger PAT margin amid steady turnover, its warehousing business saw PAT nearly double as revenue grew 75%. The marine segment also nearly doubled its PAT contribution.

“In view of the ongoing development in the market, changes in policies and the recent interest cut by Bank Negara Malaysia to counter the slowdown in the economy, the board [of directors] foresees business to be slow and challenging in the next financial year and will take appropriate measures to mitigate the adverse impacts,” says the company in its review of its FY2019 results.

“The board will continue to focus on developing its warehousing facilities while exploring new business opportunities that will enhance the growth of the group.”

See the other winners in The Edge Malaysia Centurion Club Corporate Awards 2019 here.