The Ramco Cements (RAMCOCEM) Q4 02/03 earnings summary

Executive summary

• FY03 cement sales, including self-consumption, rose 10% to 35.85 lakh tonnes, exceeding industry growth of 8%; lower selling prices drove turnover and profit declines.

• Cost savings in interest, marketing, distribution and manufacturing partly cushioned weaker realizations; net profit after tax fell to Rs.12.96 crore from Rs.25.66 crore.

Financial highlights

• Turnover, net of Central Excise and Sales Tax, was Rs.631 crore vs Rs.709 crore in FY02; cement price weakness in the South reduced realizations.

• Operating profit before interest, depreciation and tax was Rs.154.96 crore vs Rs.178.97 crore; PAT was Rs.12.96 crore vs Rs.25.66 crore.

• PBT after prior-period items was Rs.23.33 crore vs Rs.40.66 crore; tax provision was Rs.10.37 crore, including Rs.8.52 crore deferred tax and Rs.1.85 crore current tax under MAT.

• EPS was Rs.107 vs Rs.212; a 60% equity dividend was recommended, unchanged from FY02.

Outlook and guidance

• FY04 cement demand was expected to benefit from infrastructure projects; anticipated demand growth was expected to narrow the industry capacity-demand gap and improve utilization.

• Export-market acceptance was expected to support export turnover; continued cost reduction across production and distribution was a priority to protect and improve profitability.

• Cement demand was expected to improve, with no major selling-price upheaval anticipated; higher captive power generation and plant efficiencies were expected to improve cost competitiveness.