Shree Cement (SHREECEM) Q4 98/99 earnings summary

Executive summary

• FY ended June 30, 1999: sales rose 29% to Rs 442.14 crore; operating profit increased, but PAT fell to Rs 5.83 crore amid higher interest and depreciation.

• Cement plants operated above 100% capacity utilisation; cement and clinker sales reached a record 22.54 lakh tonnes, up 25% YoY.

Financial highlights

• Sales increased to Rs 442.14 crore from Rs 342.78 crore; total income was Rs 444.98 crore, up 24.47% YoY.

• Operating profit rose 30.50% to Rs 75.08 crore; net interest was Rs 44.07 crore and depreciation Rs 25.14 crore.

• PAT declined 31.79% to Rs 5.83 crore from Rs 8.54 crore; cash EPS increased to Rs 8.89 from Rs 5.65.

• Operating cash flow rose to Rs 17.66 crore from Rs 14.75 crore; closing cash and bank balances were Rs 13.43 crore.

• No dividend was recommended, reflecting moderate profits.

Outlook and guidance

• Capacity planned to increase from 2.0 MT to 2.6 MT annually by December 2000, at an estimated cost of Rs 50 crore.

• Balancing-equipment expansion was estimated at ~Rs 850 per tonne, versus prevailing cement-plant capital costs above Rs 3,000 per tonne.

• Management expected improved cement demand and realizations to continue into FY 1999-2000, supported by housing, infrastructure and rural demand.

• Focus areas included cost competitiveness, de-bottlenecking, working-capital improvement and expansion of the dealer and distributor network.