Allcargo Logistics Ltd. has announced its financial results for the quarter and year ended March 31, 2023. The combined EBITDA, which includes continuing business, and Contract Logistics business stood at Rs 1,250 Crs. This reflects the sum total of consolidated EBITDA as would be seen for the entity assuming complete stake in Contract Logistics which is now a 100% subsidiary, but the SPA was signed post 31 March 2023.
Q4FY23 has one-off operational costs amounting to Rs 67.4 crs. We do not anticipate any significant one-offs in Q1FY24. Adjusted for these one-off corrections in last two quarter, the FY23 reported EBITDA would have been Rs 1,213 Crs. Resilient business performance over last two years has enabled the company to reduce debt. As of 31st March 2023, the company has a consolidated net cash of Rs 604 Cr.
Revenue for FY23 declined 5.3% YoY from 19,062 Cr to 18,051 Cr. However, the Gross Profit over same period increased 7.7% from 3,476 Cr to 3,744 Cr. Decline in revenue is largely on account of ocean freight rate decline, which is mostly a pass through in LCL business and hence a similar decline in operating expenses is also visible, barring impact on FCL business and investments in new trade lanes, which would be loss making initially. LCL yield as presented in monthly update (slide 19) has remained almost same from Apr’22 to Mar’23, despite significant reduction in Ocean Freight during the period.
The volumes continue to remain lower in the flagship international supply chain business due to reduced global trade. Most leading international forwarders have reported 5% to 17% YoY drop in volumes in the quarter ending March 2023. In comparison, our volumes are down 7% YoY in LCL and remained flat YoY in FCL for the quarter ending March. Post February, it witnessed a much stronger March, but April has again been weaker. Now the estimate volume pick up to happen with the peak season, which usually starts in July.
The standalone numbers represent the India ISC business. During Q4FY23, the standalone revenue has declined by 55% YoY from Rs 950 Cr in Q4FY22 to Rs 428 Cr in Q4FY23, while the Gross Profit over the same period has declined by just 2% YoY. This highlights the robust performance of the business in a falling freight rate environment, essentially protecting the margins at a Gross Profit level.
The company intends to revive profitability in international supply chain business by increasing volumes and reducing SG&A. Yields are expected to remain rangebound with short term decline driven by competitive pressure and bounce back with improved operating parameters including utilisation and share of 40 feet containers.
Company intends to offset Gross Profit impact on account of FCL, which contributes to 30% of the total, by way of volume growth once trade environment is normalised. In LCL, yields have remained more stable as freight costs represent smaller share in costs. The express business operations are now best in industry and with mega hubs in place, it expects revenue and margins to gradually expand. Contract Logistics business continues its strong performance and is poised for strong growth in FY24.
Shashi Kiran Shetty, Founder and Chairman, Allcargo Group said, “Our focus on technology continues to drive our long-term strategy. In the short term, we remain confident about our resilience in poor macroeconomic environment for international trade. We are satisfied with the business management of the company in spite of severe headwinds in the last two quarters. The volumes are likely to improve and as this happens the performance of the company should improve. On the domestic front, Gati continues to improve its service levels, growth in revenue & EBIDTA numbers. contract logistics business has had another stellar year. It is now jointly managed with GATI and ASCPL management. I am happy to announce the appointment of Adarsh Hegde who is a veteran in the logistics industry and long-time leader within the group, as Managing Director. The company is poised well for growth in years to come. Most importantly we are looking closely at the future prospects to leverage the opportunities a market leader has.”
