The share price of Luxembourg-based Logwin has risen 25% since the turn of the year, and now trades at 17x and 6x forward p/e and EV/EBITDA multiples, respectively. However, its valuation based on these metrics could end up to be lower if it ends up beating earnings estimates for the year. That’s a distinct possibility given its second-quarter performance.
Its interim results for the six months ended 30 June, which were released last week, proved that soft market conditions persist, but the drop in revenues, down 9.9% to €479m from €532m year-on-year, didn’t harm its key operating metric, with EBITA essentially flat at €17m on a comparable basis, and EBITA margin up to 3.6% from 3.2% in the prior year. The fall in sales was mainly due to the decline in freight rates, the group noted.
Operating cash flow was still negative to the tune of €8m, but Logwin burned less cash than in the first half of 2015, when cash flow from operations was -€16m, thanks to “rigorous” working capital management.
The 3PL talked of an “underlying momentum that continued to be limited” at a time when the global economy didn’t really improve year-on-year as monetary policies from central banks have not been able to provide the necessary fillip in terms of growth. Second-quarter trends were consistent with its first-quarter performance, and broadly confirmed its trailing results for 2015.
Air and ocean freight carriers “continue to struggle with overcapacity in their markets” while at the same time there was a “relatively restrained market growth”, the group noted, adding that in the global shipping market, participants continue to look for global alliances and deeper ties will reduce operational costs while demand remains muted.
“A significant market shakeout is expected by market participants in the near future,” it pointed out.
Its air and ocean freight forwarding unit turned over €296m in the first half of the year, down 12.9% from €340.6m year-on-year. Volumes rose both in air freight and sea freight, but low freight rates proved to be constant drag on revenues, while currency also had an impact on its top-line.
Its smaller solutions unit, which generated €184.1m of sales in the first half of the year, shrank by 3.3% year-on-year due to continued price and competitive pressure.
However, gross profit margin at group level rose from 7.9% to 9.2%, yielding a higher gross profit of €44m despite falling sales. Logwin is keeping a lid on costs, with selling costs and administrative expenses falling, also thanks to positive currency effects. With a cash pile of €77m, it reported a net income of €12.4m in the first half of the year, up 6.8% year-on-year.
Source: Transport Intelligence, August 2, 2016
Author: Alessandro Pasetti