Historic quarter for Allcargo Logistics with demerger orders pronounced for company and its subsidiary for contract logistics business.
Strong cashflows make company net cash positive as Blackstone Transaction has been consummated with SPA signing
Company to consolidate its shareholding in subsidiaries and market leadership position with various acquisitions announced recently.
Mumbai, February 14th, 2023: Allcargo Logistics Ltd has announced its Q3 results, recording a resilient performance against strong macroeconomic headwinds. The combined EBITDA, which includes continuing business, discontinuing business (entities being demerged) and Contract Logistics business stood at ₹ 341 Crores. This reflects the sum total of consolidated EBITDA as would be seen for three separately listed entities post consummation of demerger.
With this development, the company is now net cash positive too, courtesy the consummation of the Blackstone transaction.
Further details are as per below table.
Summary of Combined/Consolidated Financial results Q3FY23 compared to Q2FY23
(₹ in Crs)
| Particulars | Continuing Biz | Discontinuing Biz | Contract Logistics | Combined (Q3FY23) | Consolidated (Q2FY23) |
| Revenue | 4,102 | 224 | 99 | 4,425 | 5,300 |
| Operating Cost | 3,179 | 113 | 57 | 3,349 | 4,176 |
| Gross Profit | 923 | 112 | 42 | 1,077 | 1,124 |
| SG&A | 694 | 31 | 11 | 736 | 675 |
| EBIDTA | 229 | 81 | 31 | 341 | 450 |
Key highlights:
Allcargo Logistics demerger has been pronounced by NCLT and the company is awaiting a certified copy of the order, post which the demerger process would be consummated. The company also received a certified copy for the demerger of its Contract Logistics business, which will also get consummated shortly and would result in strong synergies with other businesses. The company has also concluded the long-pending agreements with Blackstone and therefore, has reported a consolidated net debt of approx. ₹ 130 Crores for the quarter ending 31st December. It includes the ₹295 Cr debt, which has now been alienated from the books with the transfer to Blackstone. The company has also received cash of over ₹ 135 Crores, thereby making it significantly cash positive on a consolidated net-debt basis.
The largest business segment under the International Supply Chain (ISC) witnessed a continued market share expansion across the world, leading to volumes being retained at similar levels as last year for the same quarter. The market has seen significant de-growth, driven by disruptions in China and lower inventory replenishments in the west. The situation has started to normalise post the Chinese New Year and from March onwards, the trade is estimated to improve with strong pick up in second half of 2023. The company’s gross margin improved in percentage terms this quarter as compared to previous quarter. However, that is mainly driven by reduction in ocean freight rates, which is largely a pass-through cost in LCL and has only partial impact in FCL. The company has also invested in new trade lanes, which shall help expand growth in coming quarters as trade volumes return to normal levels in the operating markets. The company has also decided to focus on growth in new markets and new products, and has invested in people and operating capabilities for future growth leading to increase in SG&A costs. The acquisitions, especially of Fair Trade in Germany, will contribute to strategic expansion in the business.
The other business segments reported growth in business volumes and revenues across terminals, contract logistics and the express business. On the operating profit, the express business will take a few more quarters to turnaround as the infrastructure development continues to strengthen the operating network.
Shashi Kiran Shetty, Founder and Chairman, Allcargo Group said, “There has been a temporary slowdown in the global trade brought about by disruptions in China, and the Russia – Ukraine impacted the global freight industry. We see this as a short-term trend and global trade flows will normalize as we are already noticing pick up in volumes. We are also confident that with various measures taken by the company, we shall maintain strong yield. We shall continue to invest in people and digital capabilities to drive future growth, while prudently watching the macro-economic scenario as it unfolds. I am glad that we have expanded our LCL market share globally and see significant headroom for growth in future across all businesses.”
