>Allcargo Global Logistics (IDFC SSKI)

RESULT HIGHLIGHTS

• Consolidated revenues grew by 12.7% yoy to Rs4.8bn led by higher revenues in project cargo of Rs300mn, against Rs100mn in 1Q08 (reflected under MTO operations). However, revenues were lower than our estimates led by lower ECU line revenues, which were impacted by the trade slowdown.

• The CFS business witnessed revenue growth of 16% yoy to Rs350mn led by better realizations on a yoy basis. However, volumes fell by 10% yoy to 40,000TEU’s during the quarter as volumes across ports slowed down considerably.

• The equipment leasing business witnessed a sharp jump on a yoy basis as AGL added 18 forklifts, 10 new trailors and a crane in the quarter. Accordingly, the segment witnessed revenues of Rs160mn in the quarter.

• ECU line and other subsidiaries revenues’ grew marginally by 6.7% yoy to Rs3.5bn in the quarter (aided by euro appreciation). However, on a qoq basis, the revenues fell sharply by 30% as volumes were impacted. Further, realizations were impacted as AGL passed on the lower freight costs to its clients.

• Operating margins during the quarter improved by 150bps to 11.5% led by higher margins in the equipment hiring (+110bps to 37.2%) and ECU line (+30bps to 5.7%) led by cost efficiencies and better utilizations in the quarter.

• However, the MTO business witnessed a fall in margins of 210bps to 12.4% as the volumes fell by 17.6% during the quarter. Similarly, the fall in volumes in the CFS business as well as a lower dwell time (fallen from peak of 16 days to 11days) impacted CFS margins (-470bps to 50.6%).

• Other income increased sharply to Rs40mn led by interest generated on surplus cash of Rs500mn as well as dividend income from subsidiaries.

• The depreciation (+75% yoy) and interest (+184% yoy) costs appear higher on a yoy basis due to the merger of TFSPL and capex incurred in CY08. However, interest costs have fallen sharply by 30% qoq to Rs53mn as the interest rates in ECU line have fallen by almost 300-400bps (LIBOR) as well as the debt levels being reduced from Rs2.5bn at end of 4Q08 to Rs2.1bn at the end of the quarter.

To see full report: ALLCARGO