Conference Call with Allcargo Logistics Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.
Key Highlights from Management
Interest cost and other expenses increased due to Gati acquisition related expenses. Staff costs increased due to new hiring which should drive business growth in near term
Revenue from Operations stood at Rs 18,710 mn, and EBITDA was at Rs 1,064 mn. EBITDA margin stood at 5.69% and net profit margin at 2.89% on profits of Rs. 541 mn. The diluted EPS is at Rs 2.12 per share.
Allcargo completed the acquisition of 46.83% stake in Gati in April 2020. Allcargo’s strength in the ocean transportation and global leadership in the less than container load (LCL) combined with Gati’s expertise in land and air transportation, will enable Allcargo to offer truly end-to-end solutions to customers. The combined synergies between Allcargo’s global network of over 160 countries and Gati’s extensive domestic reach will allow the two companies to offer multimodal solutions at a scale that otherwise does not exist in India at present.
Allcargo plans to improve Gati’s financial performance by focusing on better asset utilization and the company has partnered with Alvarez & Marshal as advisors to turn around Gati and synergize best practices between the two companies.
The acquisition is in line with Allcargo Logistics' long-term strategy to strengthen its domestic business. The acquisition will further synergize our efforts to offer end-to-end services to our domestic and international customers. Apart from helping us consolidate our position as the true endto-end logistics solutions provider, the acquisition will catapult us into the market-leading position in domestic express logistics segment. It will create a lot of value by leveraging the express logistics business of Gati with our current logistics courier and parcel logistics (CPL) business. We are confident that it will help Allcargo Logistics achieve sustainable growth as a leader in the logistics industry in the short, medium and long run.
MultiModal Transport: Key Operational Highlights in MTO for Q4-FY20:
The segment continued gaining global market share. Volumes from allied and FCL services continued to grow, and ECU had consistent Gross Profit. YoY quarterly growth in volumes is 8.7% and Return on Capital Employed (ROCE) stands at 24% on an annualised basis.
Container Freight Performance
Revenue remained consistent, overall volumes decreased marginally. There was a decline in volumes in the quarter due to Covid impact in March as container deliveries were deferred to the next quarter. Margins contracted due to small drop in revenue and increase in operating costs. Market share continued to be same despite the reduction in CFS addressable market. The Return on Capital Employed (ROCE) stands at 27% on an annualised basis
Projects Engineering Performance
Improved overall utilizations of equipment segment in Q4FY20 versus last year. The utilization levels were better than last year and had moved to 65%. P&E division’s performance was primarily impacted by Provisions made for doubtful debtors as per the accounting policy. However, this segment has longer credit periods and there is a high probability of recovery and a write back of these increased provisions.
Decline in EBIT was primarily due to accelerated depreciation. Continued effort to free up capital from Equipment segment with sale of under utilized assets The order book in Project Logistics segment was Rs 1,392 mn as on 31st March 2020 with a Visible Pipeline of Rs 4,864 mn. Project Logistics presence in East Africa and Indian subcontinent countries further consolidated with new orders from these countries