Shree Cement (SHREECEM) Q4 01/02 earnings summary

Executive summary

• 2001-02 covered nine months (July-March) versus 12 months in 2000-01; turnover was Rs 397.22 cr, so reported periods are not directly comparable.

• Despite the cement slowdown and production interruptions during expansion and the fuel switch, cash profit rose 28% on an annualized basis; return on capital employed improved to 19.02% from 16.94%.

• Strategic priorities shifted toward retail marketing, brand building and lower-cost operations, supported by 0.6 million tonnes of added capacity and a planned captive power plant.

Financial highlights

• Turnover was Rs 397.22 cr and total income Rs 397.53 cr for the nine months ended 31 March 2002; prior-year turnover was Rs 554.60 cr for 12 months.

• Operating profit before interest and tax was Rs 76.77 cr; profit before depreciation and tax was Rs 49.84 cr, versus Rs 51.76 cr for the prior 12-month year.

• Profit after tax was Rs 1.47 cr, including Rs 21.03 cr of depreciation on revalued assets and Rs 2.14 cr deferred tax; EPS was Rs 1.03 and cash EPS Rs 17.89.

• Cash flow from operations was Rs 46.74 cr; cash profit was 28% higher on an annualized basis, while PBDIT grew 28.38% and cash flow 20.39% as reported in the financial highlights.

Outlook and guidance

• 2002-03 targets: production up 10%, costs down 10%, higher realizations per bag and retail offtake at 65% of sales.

• The 36 MW captive power plant was expected to be commissioned by December 2002; projected annual savings were Rs 30 cr, with payback under four years.

• Management expected additional capacity and the pet coke fuel switch to deliver a full-year benefit in 2002-03; a full year on pet coke was estimated to save Rs 30 cr.

• Cement demand was forecast to grow 9% in 2002-03; housing, infrastructure investment and no new North India capacity were cited as demand and supply supports.