Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Blue Dart Express Ltd (BOM:526612, Financial) reported a profit after tax of INR 515 million for the quarter ended June 28, 2024.
- Revenue grew by 8.5% quarter-on-quarter, with shipment volume increasing by 7.4% and weight by 9.6%.
- The company invested in two new aircraft, which is expected to enhance operational capacity.
- Blue Dart Express Ltd (BOM:526612) successfully concluded its annual general meeting, passing all resolutions including the appointment of a new independent director.
- The company remains optimistic about achieving better utilization rates and margin improvements during the festive season starting in September.
Negative Points
- Profit from operations decreased from INR 801 million to INR 693 million quarter-on-quarter due to increased costs.
- The new aircraft sector, particularly the Northeast or Guwahati sector, is yet to reach optimal utilization, impacting profitability.
- Margins have been pressured by increased competition in the surface transport segment, which is less profitable than air transport.
- The company faced higher costs due to investments in new hubs and annual merit increases for employees.
- Despite revenue growth, gross margins and EBITDA margins have declined sequentially, raising concerns about the company's margin expansion trajectory.
Q & A Highlights
Blue Dart Express Ltd (BOM:526612) Q1 FY25 Earnings Call Highlights
Q: Can you provide the volume numbers in tonnage and number of parcels, and split it between air and surface?
A: We don't provide bifurcation within our product lines. Overall, last quarter saw 83.94 million shipments, and this quarter it is 90.15 million. In terms of weight, it was 285,643 tonnes last quarter and 313,089 tonnes this quarter.
Q: What is the utilization rate of the two new aircrafts and their contribution in Q1 FY25?
A: The aircraft were capitalized in June 2023, and this quarter reflects a full quarter effect with an impact of around INR115 million. Utilization is still ramping up, especially in the new Northeast sector, with inbound utilization at 75-80% versus the optimal 85-90%.
Q: Given the growth in top line, why have we seen a decline in gross and EBITDA margins?
A: Margin expansion depends on internal investments and external domestic demand. Investments in hubs and depreciation have impacted profitability. Growth is more on the surface, facing tough competition, which affects margins.
Q: When can we expect the margin expansion trajectory to begin?
A: We don't provide forward-looking statements, but with a steady growth of 10-12%, we aim for margins between 7-8%. The festive season and investments should help improve margins.
Q: What caused the shrinkage in gross margin between the two quarters?
A: The product mix change from air to ground is a key driver. Incremental costs such as merit increases and underutilization of new sectors also contributed.
Q: Has there been any one-off cost this quarter?
A: No, this quarter's costs are normal, and we expect efficiencies or revenue improvements in upcoming quarters.
Q: What is the CapEx plan for the additional hubs, and is it included in the CapEx guidance of INR250 crores?
A: Yes, the expansion of hubs is part of the CapEx plan and budget. We aim for profitable growth despite strong competition in the surface business.
Q: How are we managing pricing strategy in regions where we are not dominant?
A: Pricing depends on customer base and market conditions. We aim for profitable growth and may offer special pricing initially to attract steady volumes.
Q: Has there been a price decline sequentially in Express and Surface Express segments?
A: We don't comment on individual products, but overall, there has been a marginal growth in RPS and a slight decline in RPK.
Q: What is the sensitivity of fuel cost to the overall cost line?
A: Fuel cost is neutralized by a variable surcharge clause in customer contracts, which adjusts based on global Brent oil prices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
