Shree Renuka Sugars (RENUKA) Q4 13/14 earnings summary

Executive summary

• Wilmar strategic partnership advanced through a proposed US$200 million equity investment; after the preferential allotment, Wilmar and the existing promoters each held 27.72% and shared control.

• Operating performance improved in some areas, but standalone and consolidated results swung to losses amid weak sugar prices, high cane costs, foreign-exchange losses and elevated financing charges.

Financial highlights

• Standalone revenue including other income rose 2.6% to ₹65,771 million in FY14 from ₹64,104 million; EBITDA fell to ₹1,947 million from ₹6,098 million, and net result was a ₹4,661 million loss versus ₹518 million profit.

• Consolidated total income increased to ₹116,116 million from ₹104,158 million; EBITDA declined to ₹9,881 million from ₹15,635 million, while net loss widened to ₹14,780 million from ₹3,740 million.

• Standalone exceptional foreign-exchange loss was ₹3,317 million versus ₹77 million; consolidated foreign-exchange loss was ₹6,319 million versus ₹2,987 million.

• Standalone profit before tax was a loss of ₹6,208 million versus profit of ₹759 million; basic EPS was a loss of ₹6.94 versus earnings of ₹0.77.

Outlook and guidance

• Indian sugar-sector decontrol and revenue-sharing cane-pricing laws were expected to support more stable operating margins over time, although benefits were projected to take a couple of years to emerge.

• ISMA estimated Indian sugar production of 25.3 million tonnes in 2014/15 versus consumption of 24.8 million tonnes; exports and improved world prices were identified as important to reducing inventories.

• Brazil’s Centre-South cane availability was forecast to fall 8.6% to 546 million tonnes in 2014/15, with sugar production also forecast down 8.6% to 31.4 million tonnes.

• The government’s 1,560 million-litre ethanol tender covered supply from Nov 2014 to Oct 2015; the government was assessing a move in mandatory blending from 5% to 10%.