Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Snowman Logistics Ltd (BOM:538635, Financial) maintained its market share between Q4 and Q1, despite a weak quarter.
- The company expects improvement in volumes and business activity in the upcoming quarters.
- Snowman Logistics Ltd (BOM:538635) is not compromising on EBITDA margins despite low volumes.
- The company is actively working on regaining business from existing customers and acquiring new business.
- Snowman Logistics Ltd (BOM:538635) has plans to monetize its CFS assets, which could provide significant cash inflow.
Negative Points
- The company experienced a decline in market share in regions like Uttarakhand and Ludhiana due to pricing competition.
- Global uncertainties and subdued demand in the US and Europe are affecting growth projections.
- The rail business saw a decline in volumes and a slight slip in EBITDA margins due to lower volumes and reduced double-stack percentages.
- The company is facing challenges with port congestion and erratic vessel schedules, impacting overall performance.
- There is ongoing litigation related to the Jaipur land acquisition, which could delay the operational timeline.
Q & A Highlights
Q: This quarter has been tough given the macro situation. Can you explain the decline in rail industry volumes and our weak volumes?
A: There has been port congestion and erratic vessel schedules, but we saw some improvement in June and July. We maintained our market share compared to Q4, but lost market share year-on-year in Uttarakhand and Ludhiana due to pricing competition. Low-value commodities like wastepaper and scrap imports remain weak.
Q: What is the outlook for volumes for the rest of the year?
A: Volumes will be better than Q1, but global uncertainties make it hard to predict growth. We will wait another quarter to provide proper guidance.
Q: What about the margin profile for the rail business?
A: We are not compromising on margins. The EBITDA margin slipped slightly due to low volumes and a 2% decrease in double stack percentage. However, July and August are showing improvement, and we expect to regain business from existing customers.
Q: Any progress on monetizing the CFS land?
A: We are evaluating our five CFS locations for potential sale. Krishnapatnam is being de-notified, and part of the land has been sold to Snowman. We are preparing an information memorandum for potential buyers.
Q: What kind of volume growth should we expect for the next two years?
A: The volume decline was mainly in rail business. CFS maintained the same volume. We expect to regain rail volumes in this quarter and are targeting double-digit growth, but it depends on macro factors.
Q: Can you elaborate on the accounting policy change impacting CFS revenue?
A: The change involves discount pass-throughs being removed from gross revenue. This adjustment does not affect operational costs or EBITDA per TEU.
Q: What is the outlook for the NCR and Ludhiana markets?
A: We are not providing specific guidance due to macro uncertainties. Ludhiana saw a 15-20% dip in Q1, while NCR was flat. Overall, India is expected to grow at 5-6% in EXIM volume.
Q: What is the status of the Jaipur facility?
A: We expect it to be operational in about 12 months. The litigation is ongoing, but we are proceeding with plans for a full-fledged ICD.
Q: What percent of our volume comes from low-value products like scrap paper?
A: Low-value commodities constitute about 20% of overall volumes, with wastepaper being a significant part. We are targeting new importers and expect volumes to improve.
Q: How do we plan to use the funds from monetizing CFS assets?
A: It's too early to say. We will decide based on the valuation we get. Rail business expansion is a likely area for fund deployment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
