Shree Cement (SHREECEM) Q4 00/01 earnings summary

Executive summary

• FY ended June 30, 2001: sales rose 14.77% to Rs 556.12 cr and PAT rose 70% to Rs 26.11 cr despite a weak Indian cement market.

• Higher realisations, tighter receivables and inventory management, cost reductions, and a switch from imported coal to domestic petcoke supported stronger earnings.

Financial highlights

• Sales were Rs 556.12 cr versus Rs 484.56 cr; operating profit before interest and tax was Rs 95.77 cr versus Rs 81.38 cr.

• PAT rose to Rs 26.11 cr from Rs 15.35 cr; EPS increased to Rs 7.50 from Rs 4.41, and cash flow increased 29.33%.

• Cement production reached 2.383 mn tonnes, up 3.07% YoY; clinker and cement dispatches rose 15% to 2.579 mn tonnes.

• Proposed dividends totaled Rs 5.39 cr, including Rs 1 per equity share and preference dividends.

Outlook and guidance

• FY 2001-02 cement production target: 2.7 mn tonnes, 13.45% above the prior year, with no increase to plant capacity; targeted average utilisation was 135%.

• FY 2001-02 realisations were targeted to improve 6%; management also targeted a Rs 15/tonne reduction in transportation costs and expected the full-year benefit of petcoke use.

• A 36 MW captive power plant costing Rs 120 cr was planned for commissioning by December 2002; expected annual savings exceeded Rs 25 cr, with power cost targeted to decline from Rs 4.30 to Rs 2.50 per unit.

• Management expected cement demand to improve with the 2001 monsoon, Gujarat reconstruction and infrastructure projects, while forecasting limited new capacity in the north.