LBC: 25% Revenue Increase

LBC: 25% Revenue Increase

Continuous, steady growth for the Philippines’ Logistics Leader

LBC Express Holdings, Inc. (PSE: LBC), listed company of the the country’s foremost logistics brand, recently announced its favorable year-end results for 2018.

The Group’s service revenues increased by 25%, to 12.51 billion for the year ended December 31, 2018, from 10.02 billion the previous year, attributable to 25% growth in Retail Logistics Sales and 35% in Corporate Logistics Sales.

In 2018, LBCH expanded operations by acquiring one (1) domestic and nine (9) international entities engaged in money remittance, and online and regular logistics services. Net contribution to revenue from these business combinations amounted to 889.79 million or 36% of the total increase.

There is also continuous growth in the domestic business, evidenced by the opening of 76 additional retail branches and the introduction of new products mid-2018, with total contribution of these to total revenue amounting to ?123.67 million. Improvement in the corporate/institutional segment of the Group is also noteworthy, as it expanded its e-commerce directed logistics and warehousing services, while likewise maintaining its annual growth of corporate/institutional accounts.

Cost of services increased by 30% to 8.56 billion in 2018 from 6.60 billion in 2017, in relation to volume growth in logistics services. This resulted in a 40% increase in cost of delivery and remittance.  

Direct cost was also significantly affected by the increase in fuel rates, largely due to additional taxes imposed in compliance with the TRAIN Law effective January 1, 2018. This inclined carriers, mainly outsourced airlines and truckers, to enforce rate increases during the year.

Gross profit increased by 16% to 3.95 billion in 2018 from 3.41 billion in 2017, primarily due to the increase in volume and revenue amounts for logistics services.

Net income after tax increased by 91% to 1.34 billion in 2018 from 707.92 million in 2017, mainly related to growth in gross profit by 16%, resulting from an increase in volumes; and, the recognition of gain from derivative, amounting to 454.20 million, which compensates the loss incurred in 2017.

In 2018, the Logistics business of the Group accounts for approximately 92.3% of its total revenues while Money Transfer Services accounts for the remaining 7.7%.

Retail Logistics comprised 62% of the Group’s service revenue, primarily its “Express” products (courier and air cargo forwarding) and balikbayan boxes.

In 2018, service fees from international inbound remittances was 163.22 million, accounting for 17%, of the Group’s total service revenues from Money Transfer Services. Service fees from domestic Money Transfer Services was 799.5 million, representing 83%, of the Company’s total Money Transfer Services.

From the recently released KEN RESEARCH Philippines Logistics and Warehousing Market Outlook to 2024, the notable research company was quoted,

“LBC Express has dominated the express courier service provider in the Philippines in the year 2018…

“In the domestic express delivery services, LBC Express has remained as one of the most efficient and recognized companies amongst the Filipinos.

“The company managed to dominate the express delivery market with revenue share of 39.8% in the year 2018 through its strategic approach towards the growth of express delivery service business.”

E-COMMERCE continues to open doors for logistics

According to the Google-Temasek e-Conomy SEA 2018 Report, “Supported by the increasing availability of affordable smartphones and the rollout of faster and more reliable mobile telecommunication services, Southeast Asia’s internet user base continued to grow in 2018… 

“With more than 90% of Southeast Asians connecting to the internet primarily through their smartphones, this is one of the most mobile-first internet regions globally.

“The internet economy in the Philippines ($5 billion in 2018, 30% CAGR 2015-2018) is still a relatively untapped opportunity.”

In recent years, the burgeoning E-commerce industry has created the fastest growing demand volumes for logistics providers, likewise an increased requirement in world-class service quality and trend-forward innovation. 

“Our vision for the next few years is to pave the way for Digital Logistics in the Philippines, and continue to lead the industry,” says Mike A. Camahort, Chief Executive Officer of LBC Express Holdings, Inc. He adds, “It’s a very exciting time in logistics, and there’s much to do quickly in order to be constantly, globally competitive-- everything is now in “real time”; getting into Digital is definitely a must.”

Aside from this entry into “Digistics,” operating company LBC Express, Inc. also introduced a service innovation in 2018, to address the growing demand for logistics for e-commerce. Cash On Delivery/Cash On Pick-Up (COD/COP) services are now available at all LBC branches across the nation. With this innovative new service, LBC has enabled more merchants to enter into the e-commerce arena;  sellers can have their goods delivered by LBC or picked up at an LBC branch, and payments are collected from buyers upon delivery or pick-up, then either remitted to the seller’s account or picked up from a branch. 

COD/COP utilizes both of LBC’s core services: as a courier of parcels & boxes, and a  payment collection channel. LBC branches become trading venues for Micro SMEs— COP guarantees convenient and seamless transactions between seller and buyer; a seller can now add LBC as a pick-up point. Furthermore, transactions made online are also guaranteed safe as sellers are assured of payment, while buyers are assured of receiving their purchased goods. LBC’s nationwide network and serviceable areas also allows for buyers to shop from anywhere in the Philippines, and to likewise reach more customers across the nation.

It is estimated that E-commerce, with the inclusion of “Social Selling,” will continuously grow, and create more demand for digital logistics solutions and platforms. In the KEN RESEARCH Philippines Logistics and Warehousing Market Outlook to 2024, E-commerce Logistics revenues grew CAGR 27.8% from 2016-2018. Projections reveal 24.8% CAGR from 2019-2021, the total market estimated at PhP 19B in 2021.

The Group had also embarked on a Digital Transformation in 2018: A massive, enterprise-wide digital transformation program with RAMCO Logistics and Interblocks systems. The Group is committed to continuing to invest in state-of-the-art IT systems to maintain its competitive edge and more effectively deliver quality service to its customers. RAMCO Logistics covers the needs of all the business operations from Transportation to warehousing to order management for Parcel/courier service providers, forwarders, 3PL who are seeking high Performance logistics software. RAMCO Logistics solution allows LBC to standardize its process for the logistic segment of the business into one technology and application platform thus eliminating redundancy in operations and achieving absolute data integrity and scope for planning and optimization.

For the money segment of the Group, a partnership with Interblocks, a leading provider and innovator of integrated, electronic payment processing solutions that empower Banks & Financial Service Providers across global markets, is underway. The Group will utilize Interblocks iSuite platform to drive a broad range of solutions in Service Delivery, Payments, Cards, Virtual Banking and Mobile Commerce, Interblocks combines strong financial transaction integrity and tight data security into all of its solutions, delivering a totally integrated, consistent and rich experience across all customer touch points. 

In addition, the Group has outfitted each of its couriers with handheld scanners, which will increase efficiency and minimize human error in documenting daily pick-ups and deliveries. In FY 2019, all old handhelds were replaced with latest model together with SOTI Mobility Management that will help the business eliminate handheld device downtime. The Group has also implemented a put-to-light sorting technology for its non-bulk mail, which will help automate some aspects of the parcel sorting process.

The Group has also upgraded its current network infrastructure to allow for a more secure and reliable environment. It upgraded its connectivity bandwidth and implemented a Software Defined Wide Area Network (SD WAN) to provide added network security and reliability.  This has enabled the Group to improve its network availability significantly. 

With operational enhancements and innovations, LBC Express Holdings, Inc. fortifies its leadership position, by strengthening and completing its value chain for all markets from B2B, B2C through to C2C, while continuing its vision of a global competitiveness in the years to come.