The Hindu Business Line : Concor Q1 nos suggest improving outlook

The first quarter results of Container Corporation of India, the country’s biggest carrier of rail cargo containers has surprised the street on the margin front. Despite a sedate 6 per cent growth in revenues, the company’s bottomline registered a growth of over 8 per cent on a year-on-year basis. This was driven mainly by the 40 basis points expansion in operating profit margins to over 29.6 per cent. Net profit margins also registered a positive growth, improving by over half a percentage point to 24.53 per cent.

Segmental performance

On the revenue front, Concor’s performance, while not impressive, is in line with the industry trend considering that the volumes in major ports in the June quarter have registered a growth of only over 8 per cent. Concor’s volumes also suffered due to the Gujjar agitation in Rajasthan in the last quarter.

On a segmental basis, revenues from the Exim business grew by 8.6 per cent despite there being slower growth in exports vis-À-vis imports. This was achieved primarily by rationalising the tariff structure. While previously export rates were significantly higher than the import rates, Concor raised its import rates and brought down the export tariffs to help offset the volume imbalance. This has helped the company improve its overall margins, since this segment enjoys higher margins (29.7 per cent) than the domestic segment (15.2 per cent).

However, the domestic segment reported a 5 per cent decline in revenues. While Concor may benefit by the likely diversion of freight traffic from road to rail (due to higher road freight charges), the company has nevertheless reduced its growth guidance for the domestic segment to 15 per cent from 20 per cent.

Haulage charges to increase

Indian Railways will be increasing haulage charges by as much as 14-16 per cent with effect from August 1. The management, however, has indicated that it will pass this hike in entirety to its clients. Container haulage is charged per 20 ft equivalent unit, per 1000 km. As more than 80 per cent of Concor’s containers are moved over 1000 km, the passing on of the higher haulage charges will help protect its overall margins.

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