WITH freight costs tapering down, logistics player Vibrant Group : BIP 0% posted a 20.4 per cent rise in net profit to S$3.5 million for the first half of its financial year, which ended on Oct 31.

The company’s revenue rose 2 per cent to S$95.5 million for the period, largely due to contributions from international freight forwarding. Its cost of sales fell 7.1 per cent to S$65.1 million.

As freight costs dropped from their peak, Vibrant’s gross profit margin improved by 6.7 percentage points to 31.9 per cent, from 25.2 per cent in the year-ago period.

However, the company’s other income fell significantly, from S$3.1 million in the first half of 2022 to S$200,000 in the latest half-year, due to the absence of fair-value gain on equity investments and foreign-exchange gains. The company also received less by way of government grants amid the post-pandemic recovery.

Vibrant generated net cash from operating activities of S$32.5 million, mainly from its operating profit and a decrease in trade and other receivables. It had S$62 million in cash as of end-October.

The impact of Covid-19 has eased significantly and supply-chain shocks have dissipated, Vibrant noted in its earnings. However, the Ukraine war and tensions between China and the West continue to pose challenges.

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“We remain cautious about (the freight and logistics) segment as global freight rates have dropped considerably and this will generally have an impact on our revenue,” the company said.

“Furthermore, as we approach the traditional quieter months leading up to the year-end and the Chinese New Year, demand for freight is generally expected to be slow and (the) situation may also be affected by both overstocking, as well the lack of key raw materials.”

Vibrant also believes that rising interest rates will impact trade, consumption and the value of real estate. Its management will monitor the interest-rate environment to ensure that it can “react flexibly and nimbly to significant changes”.

Vibrant closed flat at S$0.087 on Tuesday (Dec 13).