The India Cements (INDIACEM) Q4 03/04 earnings summary

Executive summary

• FY04 cement sales and operating profit rebounded on higher volumes and improved realizations, but the year still ended with a net loss of Rs.95.93 crore.

• CDR implementation reduced interest costs and supported lower losses; weak pricing and rising input costs continued to weigh on results.

Financial highlights

• Sales and other income rose 20% YoY to Rs.1,236.88 crore; cement and clinker sales volume increased 16.5%.

• Operating profit was Rs.104.80 crore versus Rs.32.72 crore; operating margin improved to 8.47% from 3.17%.

• Reported PBT loss narrowed to Rs.112.73 crore from Rs.307.23 crore; PAT loss narrowed to Rs.95.93 crore from Rs.193.17 crore.

• Interest and finance charges fell to Rs.161.68 crore from Rs.258.54 crore; FY04 included Rs.25.66 crore of extraordinary income from reduced interest for Jan–Mar 2003.

Outlook and guidance

• Cement demand was expected to grow 8% or more in FY05; projected demand could bring national supply and demand close to balance by year-end.

• South India’s supply-demand gap was expected to narrow by FY05–06; no new southern capacity was anticipated in the immediate horizon.

• Management expected CDR, higher utilization, exports and cost reductions to improve cash flows and profitability; forecasts were contingent on demand, prices and costs.