LOCAL courier firm GD Express Carrier Bhd (GDEX) warned that its net profit for the current fiscal year ending June 30 2006 will be smaller than expected, citing rising fuel costs and increased expenditure as it seeks to expand infrastructure and enter new markets.

The Mesdaq-listed company posted a net profit of RM623,000 on revenue of RM21.8 million for the first half of the year ended December 31 2005.

GDEX executive deputy chairman and the chief executive officer Teong Teck Lean identified two major areas that will affect the profits of the group this year even though it is expecting a larger revenue base.

“High fuel costs are set to hit our profitability this year, despite the implementation of the security and fuel surcharge of the 10 per cent on deliveries within the country,” he told Business Times in an interview.

Compounding the problem is the price competition among players in the local air express delivery market.

He said high fuel costs are also hurting GDEX indirectly through pressure to increase salaries and staff traveling allowances.

“We have invested in quality assurance processes, are in the process of acquiring our current 60,000 sq ft hub in Petaling Jaya, where we have been operating over the last five years, for RM5.5 million and set up some 10 new stations in the country, among others, in the last one year,” he said.

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