KUALA LUMPUR: CJ Century Logistics Holdings Bhd is disposing its loss-making courier services business for RM7.47 million.
In a filing to Bursa Malaysia, the company will be selling its entire stake in CJ Logistics Express Malaysia Bhd (CJ LEM) to CJ Logistics Asia Pte Ltd.
CJ Century said the operating environment of the company's courier services business has been challenging due to stiff competition from other courier logistics service providers and the high start-up costs.
The company's courier services segment has continued to record higher losses for the financial year ended December 31, 2018 (FY18), FY19 and FY20 amounting to approximately RM7.2 million, RM18.0 million and RM32.2 million, respectively.
This was mainly attributable to the higher costs incurred to expand trucks, network and people resources.
In contrast, both the company's total logistics and procurement logistics services segments have been the main profit contributors for FY18, FY19 and FY20.
"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 company to exit from its loss-making courier services business as well as stemming further potential losses to the group.
"This is in line with the company'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," it said.
CJ Century said upon completion of the disposal, the company intends to utilise the net proceeds estimated at RM7.31 million for working capital and repayment of borrowings within one month.