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ILB Sees Strong Growth

STARBIZ, 26 APRIL 2005

By: KATHY FONG IN WEIFANG

Integrated Logistics Berhad (ILB) is expecting strong earnings growth this year following the completion of its two new warehouses in Shenzhen and Shanghai in China.

"It is likely to be strong double-digit growth," said Chief Executive Officer Tee Tuan Sem, adding that the China operation would be the key driver for ILB's earnings growth.

The new capacity will start contributing in the second half-year.

Tee anticipates the China operation to contribute 60% of the company's pretax profit in the year ending Dec 31, 2005 from 55% last year. Overseas operations are expected to account for 75% of its pretax profit.

Tee said the Shenzhen and Shanghai warehouses, with a capacity of 660,000 and 200,000 sq ft respectively, would enable ILB to enhance its manufacturing logistics business on the mainland.

ILB has spend about RM100mil on the two warehouses. Its accumulative investment in China since 1994 is about RM200mil.

The company currently has total warehouse capacity of 5 million sq ft, including in Malaysia.

ILB posted pretax profit of RM20.5mil for 2004, compared with RM11.4mil in preceding year. Revenue rose to RM178.2mil from RM165.3mil.

Being an integrated logistics company, ILB is not only involved in transporting merchandise from point A to point B or storing goods in warehouses for customs clearing.

It offers vendor management inventory (VMI) services to multinational corporations that assemble products in China.

ILB is the only Malaysian firm that provides full-fledged "third-party" logistics services in mainland China.

In southern China's Fudian free trade zone, Shenzhen, ILB provides warehouse space for computer maker IBM to have all its inventory suppliers stationed in the multilevel warehouse to provide just-in-time service for the assembly lines located there.

"We take care of all the logistics issues so IBM doesn't have to worry about late delivery of spare parts or unused inventory piling up," he added.

Tee is confident that its VMI solution would sell well to manufacturing business amid the rising global trend of outsourcing.

ILB also seeks to expand in China and venture into Thailand.

"We have studied a few possibilities in Thailand with emphasis on transportation. But no concrete decision has been made," said Tee.

In China, ILB intends to further expand along the coastal areas. Among the places the company is keen on are Hanzhou, Suzhou, Dalian and Yantian.