Mon, Apr 09, 2012 - Page 12 News List

Dimerco looking for strategic partners

MERGERS AND ACQUISITIONS:Logistics demand is likely to be sluggish this year, so strategic alliances rather than organic growth may be the safest way to expand

By Amy Su  /  Staff reporter

Domestic companies offering freight-forwarding and logistics services, such as Dimerco Express Corp (中菲行航空貨運), are aiming to expanding their business scope through mergers and acquisitions.

Dimerco is also investigating joint ventures and forming strategic partnerships with related companies in its major markets, a company executive said recently.

“We hope such moves could help double the company’s full-year consolidated sales to US$1 billion over the next few years, from the current level of US$500 million,” Dimerco chief operations officer Edward Lin (林天送) said in an interview on March 28.

The company posted NT$15.08 billion (US$510.11 million) in consolidated revenue for last year, down 8.7 percent from a year ago, as global economic uncertainty dampened demand, company data showed.

The main factor behind Dimerco’s strategic alliance planning was a wish to deepen development in markets the company has been focusing on, such as India and various European countries, Lin said.

“Finding a partner is the fastest way for us to enter the market,” he said.

The company has used the same method — setting up its own offices gradually and forming partnerships in the meantime — to expand in China over the past few years, Lin said, adding that they plan to copy this successful pattern in other markets.

However, Capital Securities Corp (群益證券) expects the company will be more heavily reliant on forming strategic partnerships, rather than own-brand expansion, this year, as demand is still slow because of lackluster global economic sentiment.

“We have not seen a demand rebound in the cargo sector for this year yet,” Capital Securities’ research group said in a report. “The recent increase in freight rates has been dependent on companies’ capacity.”

However, Lin said the increase in freight charges might still help company revenue rebound in the second quarter from the first quarter.

First-quarter consolidated sales rose 1.12 percent from a year earlier to total NT$3.57 billion, company data showed.

For last month, Dimerco reported NT$1.35 billion in consolidated revenue, down 0.66 percent from a year earlier, but up more than 20 percent from a month earlier, data indicated.

Dimerco’s strategy and revenue targets are both in line with its major competitor in Taiwan, THI Group Ltd (台驊國際).

Earlier last month, local Chinese-language newspapers reported that THI was looking to double its revenue to NT$15 billion in three years, through mergers and acquisitions.

Consolidated revenue totaled NT$7.94 billion last year, up 33.9 percent from a year earlier, company statistics showed.

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