The India Cements (INDIACEM) Q4 05/06 earnings summary

Executive summary

• FY06 marked a strong turnaround: cement production rose 32.2% and sales 33.0%, supported by higher volumes, improved realizations and 94% capacity utilization.

• Net profit after tax rose to Rs.45.31 crore from Rs.4.58 crore; the year included Rs.9.57 crore of extraordinary income from debt-liability remission.

Financial highlights

• Sales and other income increased 31% YoY to Rs.1,836.69 crore; cement and clinker sales volume rose 17.3%, while cement realization improved Rs.189 per tonne.

• Operating profit rose 75% to Rs.268.21 crore; operating margin improved to 14.60% from 10.94%.

• PBT before extraordinary items was Rs.40.41 crore versus a loss of Rs.58.82 crore; reported PBT was Rs.49.98 crore versus Rs.4.58 crore.

• Net profit was Rs.45.31 crore versus Rs.4.58 crore; basic EPS was Rs.2.61 and diluted EPS Rs.2.11, against Rs.0.12 for both in FY05.

• Interest and finance charges increased to Rs.148.93 crore from Rs.133.50 crore; depreciation was nearly flat at Rs.78.87 crore.

Outlook and guidance

• April–May 2006 cement demand across India rose over 8% YoY; production reached 12.56 lakh tonnes and sales 12.35 lakh tonnes, versus 11.49 lakh and 11.58 lakh tonnes.

• FY06–07 outlook was positive if demand and prices held: management expected strong volume and profitability, supported by firm demand and improved prices.

• Planned upgrades over 18–24 months were expected to add about 2 million tonnes of annual capacity; total investment was estimated at Rs.345 crore, funded from FCCB proceeds.

• A 2-million-tonne-per-year Himachal Pradesh plant was planned, with project implementation targeted within 3–4 years and completion required within five years under the MoU.