Allcargo Logistics expects trade revival in second half of the year

MUMBAI : Allcargo Logistics is hopeful of a trade revival in the second half of 2024 after a sharp drop in net profit and revenue from operations in the December quarter.

Allcargo Logistics Ltd shares continued to trade in red for the second consecutive day on February 14 after the company reported an 88% decline in consolidated profit after tax (PAT) for the December quarter to ₹17 crore, as against ₹146 crore in the year-ago period. The company’s revenue from operations stood at ₹3,212 crore, down 22% from the year-ago period.

In an interview, Allcargo Logistics’ Chief Strategy Officer (CSO) Ravi Jakhar said there may not be an uptick in global trade in the fourth quarter. However, “…we expect trade revival to happen in the second half of the year because we are seeing that inflationary pressure is easing across Western Europe and other parts of the world. On the back of an interest rate cut expected in the coming months, we expect the consumer demand to revive and that should lead to improved trade in the H2 of the year.”

Allcargo Logistics is also undertaking major cost reduction initiatives to cut its selling, general and administrative (SG&A) costs.

Jakhar said the company has been working on various cost initiatives backed by digitisation , and off-shoring, among other things, that has led to benefits which are expected to start showing up from first quarter next year.

Jakhar projected Allcargo Logistics’s profit to rise sequentially from the first quarter of FY 2025.

The proposed restructuring of Allcargo Logistics, which will lead to its international supply chain becoming an independent company, is also expected to give a boost to its contract and express logistics.

Allcargo Logistics shares have declined close to 19% over the past year. The company’s current market capitalisation is around ₹7,090 crore.