Ambuja Cements (500425) Q4 98/99 earnings summary

Executive summary

• Record FY98/99 profit of Rs.150.47 crore despite depressed cement prices; cost reductions and higher volumes lifted market share and protected profitability.

• Production rose to 6.01 million tonnes from 5.05 million tonnes, using existing capacity more intensively rather than building a new plant.

Financial highlights

• Sales were Rs.1,249.73 crore versus Rs.1,130.96 crore; operating profit before interest and depreciation was Rs.382.03 crore versus Rs.352.80 crore.

• Profit before tax was Rs.150.59 crore versus Rs.136.53 crore; net profit after tax was Rs.150.47 crore versus Rs.131.66 crore.

• Direct production costs fell 20.8%; manufacturing cost was Rs.413.15 crore while production increased to 6 million tonnes from 5 million tonnes.

• Cash EPS was Rs.37 versus Rs.33; EPS was Rs.21 versus Rs.18, and equity dividend was 70% versus 60%.

Outlook and guidance

• FY99/00 began with cement demand growth of 23% in Q1, described as the industry's highest recorded; housing and concrete-road initiatives were expected to support demand.

• Growth plans prioritize profitability and include capacity expansion, acquisitions, Sri Lanka operations and two 2-million-tonne greenfield plants; Andhra Pradesh production was expected in two years.

• Balancing rapid expansion with profitability was identified as the principal execution challenge.