Friday, January 30, 2009

India Cement Q3FY09 Results highlights.....

India Cement Q3FY09 Results:

Net sales for Q3FY09 has seen a marginal growth of 1.1% on yoy basis at Rs.8637.2mn, while nine months revenues stood at Rs 29273.9mn increased by 13.6% on yoy basis. The EBIDTA for the quarter stood at Rs 1940.6 mn (declined by 21.1% on yoy basis) and on nine months it stood at Rs 8043.9mn (a marginal decline of 1.9% on yoy basis).

The EBIDTA margins registered a decline of 660 bps on yoy basis at 22.1%. This is mainly on account of a significant increase in power and fuel cost (increased from 20% to 26% as % of sales on yoy basis) and other expenditure (increased from 9% to 13% as % of sales on yoy basis). On nine months EBIDTA margins declined at 27.2% in Q2FY09 against 31.8% in Q3FY08 (a decline of 460 bps). This is again on account increase in other expenditure, raw material cost and power and fuel cost. Net Profit for the quarter has seen a degrowth of 51.3% on yoy basis at Rs.619.1mn, whereas nine months PAT stood at Rs 3383.2 mn (a degrowth of 36.5% on yoy basis).

Net margin for the quarter has significantly declined from 14.8% in Q3FY08 to 7.1% in Q3FY09. This is mainly due to increase in depreciation cost along with poor Operating margins. EPS for the quarter stood at Rs 2.2, decreased by 52.7% on yoy basis and on nine months basis it is stood at Rs 12 decreased by 38.7 on yoy basis.

Key takeaways of India Cement Con Call:

· The realisations are up marginally and the price to remain firm and expects it to hold on till June. The company's capacity expansion coming on stream by March end.
· Due to excess rain company has extended stoppages in two plants but expects to run at full capacity till March.
· The profits are lower because of stoppage in production due to excess rain in two plants; Vishnupuram – former Raasi plant – as well as Dalavoi had a slightly extended stoppage. As a result of this company produced 2 lakh tonnes less than the same quarter last year. On QoQ, production about 4 lakh tonnes less.
· The loss has been offset by a marginal increase in realisation. Compared to the same quarter last year, realisation is up by Rs 200 and marginally up compared to QoQ.
· Simultaneously on same quarter last year, coal fuel cost has gone up substantially. Company paid almost Rs 5,680 per tonne this year for what was Rs 4,000 per tonne. Now in Q4, coal costs would start coming down. On QoQ basis the coal cost increased by Rs 200 per tonne to Rs 5880/-. The contracts are done for 4-5 months and it maintains inventory of 40-45 days. So the reduction in coal prices would benefit from March onwards. The company expects to benefit by Rs 400-450 per tone.
· Company expects demand to continue for another two quarters, the prices are expected to hold and there might be chances to increase in March. So, this last quarter it would run at full capacity. Subsequently as well at least until July-August, they don’t see any reason for any slowdown.
· Till now company has invested Rs 350 cr for capacity expansion and another Rs 200 cr is expected to spend in this fiscal. Capex for FY10 is Rs 400 cr and for FY11 is Rs 200 cr.
· The cash and bank balance is at Rs 435 cr and it carries debt of Rs 2000 cr.
· By the end of March 09 all capacity to come and the total capacity will be 14 mn tonnes.
· For next quarter company expects to sell 2.5-2.7 mn tonnes of cement and for FY10 it has projected to sell 11 mn tones of dispatches.
· The company transports 77% by road and 23% by rail. Its maximum lead distance is 400 kms, the reduction in fuel prices will benefit the company by 2% on selling and distribution expenses.


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