Release Date: February 17, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Allcargo Logistics Ltd (BOM:532749, Financial) reported a 28% year-on-year growth in consolidated revenue for Q3 FY25, reaching INR4,106 crores.
- The company achieved a 24% increase in consolidated EBITDA for Q3 FY25 compared to the same quarter last year.
- Contract logistics business experienced a significant revenue growth of 62% year-on-year, driven by new client additions.
- The company has successfully reduced its net debt from INR651 crores to INR614 crores by the end of December 2024.
- Allcargo Logistics Ltd (BOM:532749) has gained market share in the domestic business and performed better than competition in the international business.
Negative Points
- Profit after tax for Q3 FY25 decreased to INR10 crores from INR17 crores in the same quarter last year.
- The international business faced unpredictability due to global geopolitical and economic events, impacting short-term trade volume growth.
- The domestic market remains flat with no significant uptick in growth, hovering around a 10% growth rate.
- The company incurred severance costs of approximately INR20 crores to INR23 crores in the current quarter due to restructuring efforts.
- Despite revenue growth, the express business's profitability is not fully translating due to operational leverage challenges and white space in contract logistics.
Q & A Highlights
Q: Can you elaborate on the growth in the FCL business and the regions contributing to it?
A: The FCL business has seen significant growth in Asia, India, and Latin America. These regions have been the primary contributors to the growth. Europe, however, remains a concern due to its economic conditions. (Ravi Jakhar, Chief Strategy Officer)
Q: Is there a shift from LCL to FCL, and what sectors are driving the FCL business?
A: There is no significant shift from LCL to FCL currently, as freight rates have been stable. The FCL business is diverse, with commodities varying by region, such as minerals and agri commodities in Latin America, and consumer electronics and auto in India. (Ravi Jakhar, Chief Strategy Officer)
Q: What is the outlook for the Contract Logistics business, and have there been any recent major customer signings?
A: The Contract Logistics business has seen a 62% year-on-year revenue growth, driven by new client additions. While revenue growth is strong, profitability is expected to improve as white space is reduced. (Ravi Jakhar, Chief Strategy Officer)
Q: How is the restructuring process progressing, and what are the expected timelines?
A: The restructuring involves demerging the international supply chain business and merging Gati with Allcargo. Shareholder meetings are scheduled, and approvals are expected by April. The restructuring aims to optimize costs and improve profitability. (Deepal Shah, Group CFO)
Q: What is the impact of foreign exchange rates on the business, and how are freight rates affecting revenue?
A: Most transactions are in U.S. dollars, providing a natural hedge. Freight rates have been stable, with no significant impact on revenue. The realization drop is mainly due to stable freight rates and trade composition. (Ravi Jakhar, Chief Strategy Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.