CJ Century Announces Proposed Divestment Of Its Courier Services Business

Klang, 4 June 2021 - CJ Century Logistics Holdings Berhad ("CJ Century") today announced the signing of a conditional sale and purchase agreement with CJ Logistics Asia Pte. Ltd. (“CJ Asia”) for the disposal of its courier services business through the divestment of its 100% equity interest in CJ Logistics Express Malaysia Sdn. Bhd. (“CJ LEM”).

Deemed to be a related party transaction, the sale consideration for the purchase of all the sales shares amounted to approximately RM7.5 million, which is arrived at on a willing buyer-willing seller basis, after taking into consideration CJ LEM’s net assets as at 30 April 2021.

Steven C. H. Teow, Chief Executive Officer shared that the operating environment of the Group’s courier services business has been challenging as a result of stiff competition from other courier logistics service providers and the high start-up costs. CJ Century’s courier services segment has continued to record losses for the FYE 31 December 2018, FYE 31 December 2019 and FYE 31 December 2020 amounting to approximately RM7.2 million, RM18.0 million and RM32.2 million respectively in negative earnings, mainly attributable to the higher costs incurred for the expansion of trucks, network and people resources.

Pursuant to the above and coupled with the continued challenging operating environment of the courier services business moving forward, the offer by CJ Asia to acquire the courier services business of CJ LEM is seen as an opportunity for the Group to exit from its loss-making courier services business as well as stemming further potential losses to the Group.

“Fortunately, our Total Logistics and Procurement Logistics services segments have been contributing to continued growth and sustaining CJ Century’s market share in Malaysia over the years. The proposed disposal is in line with the Group’s strategic direction to discontinue operations which are deemed less viable and to refocus its resources on its total logistics and procurement logistics services business. Ultimately, we are optimistic about our capabilities and business potential for growth. Following this corporate divestiture, we believe that we can achieve greater value creation for all our stakeholders.” Steven Teow added.

Going forward, CJ Century will continue to strategize to maintain its market shares, focus on improving operational efficiency, streamline to control costs as well as enhance customer experience with advanced service innovation and premier logistics solutions, while striving to deliver solid growth and returns to its stakeholders.

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