Allcargo Logistics net profit declines 78% to Rs 51.90 cr in March quarter

Allcargo Logistics' consolidated net profit declined 78 per cent to Rs 51.90 crore in the March 2023 quarter, according to a late-night regulatory filing on Tuesday.

The company had posted a consolidated profit of Rs 240.55 crore in Q4 FY22, the filing said.

Allcargo, in a statement, announced the appointment of logistics industry veteran Adarsh Hegde as its Managing Director.

The consolidated net profit in the January-March quarter of the previous fiscal stands at Rs 51.90 crore, taking into consideration profit from continuing and discontinuing operations, as per the filing.

The total income from continued operations slipped 37.49 per cent to Rs 3,415.40 crore in the quarter under review against Rs 5,464.23 crore clocked in the March 2022 quarter, it added.

For the full fiscal 2022-23, its consolidated profit (from continuing and discontinuing operations) fell 48 per cent to Rs 653.21 crore from Rs 964.59 crore in FY22.

The total income (consolidated) from continuing operations in FY23 dropped 5 per cent to Rs 18,115.43 crore against Rs 19,092.45 crore in FY22.

"Decline in revenue is largely on account of ocean freight rate decline, which is mostly a pass-through in LCL (less-container load)business," Allcargo said in a statement.

Hence, a similar decline in operating expenses is also visible, barring an impact on FCL (full container load) business and investments in new trade lanes, which would be loss-making initially, it added.

"Post February, we witnessed a much stronger March, but April has again been weaker. We now estimate volume pick up to happen with the peak season, which usually starts in July," the company said.

During Q4 FY23, the standalone (International Supply chain) revenue declined 55 per cent to Rs 428 crore from Rs 950 crore in Q4 FY22, while the gross profit over the same period has declined by just 2 per cent, Allcargo said.

This highlights the robust performance of the business in a falling freight rate environment, essentially protecting the margins at a gross profit level, it added.

"Our focus on technology continues to drive our long-term strategy. In the short term, we remain confident about our resilience in a poor macroeconomic environment for international trade," said Shashi Kiran Shetty, Chairman, Allcargo Group.

Expecting an improvement in the volumes going forward, Shetty said that "on the domestic front, Gati continues to improve its service levels, growth in revenue and EBITDA numbers..."

"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," he added.

The company also said it intends to offset the gross profit impact on account of FCL, which contributes to 30 per cent of the total by way of volume growth once the trade environment is normalised.

"In LCL, yields have remained more stable as freight costs represent a smaller share in costs," it noted.

Allcargo said it is seeing a positive impact of cost rationalisation being driven through automation and process improvement.

"This will offset costs in coming quarters, and we estimate SG&A costs to be lower in following quarters," the company said.