UltraTech Cement (ULTRACEMCO) Q4 03/04 earnings summary

Executive summary

• Cement operations transferred from Larsen & Toubro under a demerger effective May 14, 2004, with an appointed date of April 1, 2003; installed capacity was 15.5 Mtpa, or 17 Mtpa including Narmada Cement.

• The year combined standalone profitability with a consolidated loss before tax, reflecting Narmada Cement’s weak performance; management priorities included reducing debt, cutting costs and improving operating efficiency.

Financial highlights

• FY2003-04 standalone sales were Rs 2,704.86 crore; PBDIT Rs 361.14 crore, PBIT Rs 146.67 crore, PBT Rs 49.20 crore and PAT Rs 38.83 crore.

• Standalone net sales after excise were Rs 2,262.84 crore; other income was Rs 42.05 crore and net interest expense Rs 97.47 crore.

• Consolidated sales were Rs 2,750.27 crore and consolidated PBT was a loss of Rs 35.47 crore; loss after tax was Rs 15.82 crore, while profit after minority interest was Rs 17.19 crore.

• Standalone cement and clinker dispatches reached 14.87 Mt, up 7% YoY; clinker production rose 5% to 12.12 Mt, while cement production was 11.79 Mt versus 11.74 Mt.

• Domestic cement realization declined to Rs 1,266/tonne from Rs 1,276; export realization improved by USD 2.7/tonne.

Outlook and guidance

• FY2004-05 cement demand was expected to grow 7-8%, supported by forecast GDP growth of 8%, infrastructure investment and housing demand.

• Industry oversupply was expected to persist and pressure cement prices; cost reduction and manufacturing efficiency were identified as priorities.

• Management targeted growth faster than the market, improved market share and profitable export development.