Higher realisations help Container Corporation negate decline in Exim volumes

Higher realisations helped Container Corporation of India ( Concor) post marginal growth in net profit, despite a decline in export-import (Exim) volumes. After taking into account the one-time adjustment made in the September quarter of last year, its net profit grew 5% year-on-year to 232 crore.

Although the short-term concerns over sluggish volumes remain, the company's long-term prospects are bright as it has an established infrastructure of rakes and warehouses. In the September quarter, Concor recorded a 2.8% decline in Exim volumes, while the domestic volumes declined 5.6%. Exim volumes, on an average, form three-fourth of the total volumes handled by Concor.

The fall in Exim volumes was primarily due to the slowdown in developed economies. Domestic volumes, on the other hand, declined due to lower movement of iron ore - one of the major materials transported by Concor - this year. Iron ore freight suffered because of a ban on mining in mineral-rich states. But, an increase in realisations per container offered the company a reason to cheer.

Average realisations improved 10%, resulting in a 6% growth in revenue in the quarter. The company's operating margin, however, dropped by 200 basis points to 24.4% due to higher lead distances of empty running rakes. Exim volumes are likely to be under pressure for a few more quarters because of the global slowdown. Hence, the management's guidance of 9% growth in volumes in FY13 looks less probable. But, Concor will benefit when there is a revival.