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Blue Dart: Fuel surcharges takes toll - Views on News from Equitymaster
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Blue Dart: Fuel surcharges takes toll
Apr 16, 2009

Performance summary
  • Standalone topline of the company declines by 12.6% YoY mainly on account of lower fuel surcharge.
  • Operating profits decline by 57.2% YoY causing a fall in EBITDA margins by 10.4% to 9.9%, mainly on account of fall in operating income.
  • Decline in operating profits caused bottomline to drop by 61.9% YoY during the quarter.


(Rs m) 1QCY08 1QCY09 Change
Net sales 2,397              2,096 -12.6%
Expenditure               1,910             1,887 -1.2%
Operating profit (EBDITA)                  487                 209 -57.2%
EBDITA margin (%) 20.3% 9.9%
Other income                       9                    14 57.8%
Interest (net)                       0                     -  
Depreciation                     39                    44 12.1%
Profit before tax                  457                 179 -60.8%
Tax                  150                    62 -58.6%
Profit after tax/(loss)                  307                 117 -61.9%
Net profit margin (%) 12.8% 5.6%
No. of shares (m)                 23.7                23.7
Diluted earnings per share (Rs)*                24.6
Price to earnings ratio(x)**                17.5
(* annualised, ** on trailing twelve months earnings)

What has driven performance in 1QCY09?
  • The topline of the company declined by 12.6% YoY on account of lower fuel surcharge due to lower crude oil prices during the quarter as compared to same quarter last year. It may be noted that fuel surcharge contribution to the topline declined from 45% in 1QCY08 to 22% in 1QCY09. Furthermore, slowdown in the economy resulted in deceleration of volumes growth during the quarter. The company business is heavily depended upon the performance of economy as it operates in the logistic industry.

  • The operating margins contracted by 10.4% to 9.9% during the quarter. This was on account of just 1.2% decline in operating expenses as compared to the near 13% drop in topline. All the major cost heads with the exception of freight and servicing costs actually increased on a YoY basis, thus causing further damage to margins. Even in the case of freight costs, the decline was a lot less than the decline in topline and hence, all these factors put together led to the huge operating profit decline of 57% YoY.

    Cost Break up
    (Rs m) 1QCY08 1QCY09 Change
    Freight handling & servicing costs 1,457              1,390 -4.6%
    % sales 60.8% 66.3%
    Staff cost                  288 310 7.7%
    % sales 12.0% 14.8%
    Other expenditure 165 187 13.6%
    % sales 6.9% 8.9%

  • The decline in bottomline at 62% YoY, came in greater than the fall in operating profits, mainly on account of higher depreciation to the tune of 12% YoY.

What to expect?
At the current price of Rs 430, the stock is trading at a multiple of 7.6x its expected CY10 earnings. The company’s performance has come in way below our expectations. However, we would like to wait for one more quarter before we revise our estimates.

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