Blue Dart Express (526612) Q4 97/98 earnings summary

Executive summary

• FY98 revenue reached Rs 1,709.2m; net loss was Rs 42.4m, driven by weaker international sales and contribution after the FedEx contract transition, plus Rs 17.9m of restructuring costs.

• Focus shifted to consolidating the aviation system, improving sales mix and yields, and reducing network and pickup/delivery costs.

Financial highlights

• Revenue was Rs 1,709.2m versus Rs 1,573.9m in FY97; operating expenses rose to Rs 1,628.7m from Rs 1,465.1m.

• Profit before interest, depreciation and unusual items was Rs 80.5m versus Rs 108.8m; loss before tax and unusual items was Rs 24.5m versus profit of Rs 14.1m.

• Net loss was Rs 42.4m versus net profit of Rs 4.9m; restructuring costs were Rs 17.9m versus Rs 8.5m in FY97.

• Service charges were Rs 1,608.5m and lease rentals Rs 100.7m; net cash from operating activities was Rs 15.7m versus cash used of Rs 119.3m.

Outlook and guidance

• FedEx contract design anticipates that initial revenue and rate declines will be offset by volume growth in direct sales over the five-year term; management expected future benefit from rising volumes.

• Cost reduction actions targeting network and pickup/delivery operations were expected to have their full impact in FY99.

• Superhub operations were expected to commence in Q4 FY99, with anticipated savings in rent, communications and conveyance, alongside higher package-handling capacity.

• Management expected domestic sales mix to continue rising, supported by the domestic network and aviation system.