Shree Cement (SHREECEM) Q4 05/06 earnings summary

Executive summary

• FY06 net sales rose to ₹667.69 crore from ₹582.08 crore; EBITDA increased 29.47% to ₹225.18 crore, while reported PAT fell to ₹18.40 crore from ₹29.07 crore.

• Efficiency gains and stronger realizations supported a 33.73% operating margin; the Ras greenfield plant added 1.5 mtpa and was commissioned within budget.

Financial highlights

• Gross sales were ₹824.13 crore versus ₹723.03 crore; net sales increased 14.71% to ₹667.69 crore.

• EBITDA rose 29.47% to ₹225.18 crore; gross profit increased 37.80% to ₹212.35 crore from ₹154.10 crore.

• Reported PBT was ₹27.14 crore versus ₹31.13 crore; PAT was ₹18.40 crore versus ₹29.07 crore.

• Cement production reached 3.22 million tonnes, up from 3.02 million tonnes; cement sales were 3.20 million tonnes versus 3.06 million tonnes.

• EPS was ₹5.28 versus ₹8.34; cash EPS rose to ₹54.04 from ₹43.53.

Outlook and guidance

• Expansion plans targeted 9.1 mtpa capacity by FY08 and 10 mtpa by 2010; two 1.5 mtpa brownfield units were planned for commissioning by March and December 2007.

• A 2.0 mtpa grinding unit near Gurgaon and additional 54 MW captive power capacity were under implementation.

• Management expected strong demand to absorb North India capacity additions; industry expansion was expected to increase competition from 2008-09.

• Full benefits from more than ₹300 crore of greenfield capex were expected in FY07, supporting further operating improvement.