QEX Logistics reports $4m loss of inventory in China, suspects theft

Ronnie and Doreen Xue of QEX Logistics. Picture / supplied

NZX-listed QEX Logistics says about $4 million of inventory appears to have been stolen from its bonded warehouse in China.

The logistics company, which exports Kiwi products such as baby food and health supplements to individual Chinese consumers, said the exact value of the inventory in question is still being assessed.

It is working with staff in Shanghai, auditors, Chinese Customs, the property landlord, local police and diplomatic channels to determine the exact circumstances leading to the removal of the goods.

"At this stage the QEX board has taken the view that the inventory has been stolen from the company's Shanghai premises."

QEX said if it is unable to recover the stock it will have a material adverse impact on the company's financial performance and net profit this year.

It will also mean subsidiary company New Y Trading, which owns the inventory, will not meet three of its financial covenants relating to its loan facility with banks.

"The company is proposing to liaise with its bankers today, with a view to confirming the ongoing support of its bank in respect of the prospective breaches of covenant, and to seek a waiver of those breaches from its bankers," QEX said in a statement to the stock exchange.

"The extent of the impact on the financial performance and financial position of the company has yet to be conclusively determined by the board at this time," the company added.

The company made no mention of insurance arrangements in its initial statement but said further announcements will be made as information comes to hand.

QEX shares fell 17 cents, or 36 per cent, to 30c.

In June, QEX said it was expecting a challenging first half of the financial year, although there were also opportunities due to the Covid-19 pandemic.

"Demand for milk powder and other New Zealand products remains strong in China, despite the uncertain global economic environment," the company said in its full-year result announcement.

It reported a 38 per cent slide in net profit to $1.2m for the year to March 31, contributing the decline to weaker margins in the first half of the year and costs establishing a new base in Sydney.