Shree Cement Posts Stellar Performance For The June Quarter 2012

Shree Cement, one of the major cement manufacturing and power companies, has announced its June 2012 quarter result with a robust topline as well as bottomline growth on a YoY basis. The net sales of the company grew by 40 per cent YoY to Rs 1,455 crore while the net profit has grown by 539 per cent to Rs 351 crore. The significant jump in net profit was mainly due to a decline in depreciation by 48 per cent and growth in realization and cement dispatches during the quarter. The company’s realization improved by 12 per cent YoY to Rs 3,840 per tonne and the sales volume jumped by 26 per cent YoY to 3.37 million tonnes.

Moreover, the operating performance of the company was also quite commendable. Its operating profit shot up by 86 per cent YoY to Rs 481 crore while the EBITDA margins improved by 800 bps to 33.06 per cent YOY due to better margins in the cement and power division. In terms of segments, both the divisions have done much better as compared to the same period last year. In fact, the company sprung a surprise with its positive EBIT levels in the power division which had been posting losses at its EBIT level for the past five quarters. It has now shown strong recovery with a positive EBIT of Rs 64 crore against a loss of Rs 79 crore in the same period last year.

On the back of higher realization and steady demand due to delayed monsoon, the EBIT of the cement division improved by 650 bps to 26.25 on a YoY basis. The EBITDA per tonne of the cement division improved by 50.8 per cent YoY and 12 per cent QoQ to Rs 1,326 per tonne. The operating cost per tonne for the cement division declined by 1.8 per cent YoY to Rs 2,479 per tonne led by a decline in energy, freight and raw material costs. However, though the company has posted a strong performance for the June quarter, the revival of the monsoon will have led to a slackening of demand in the short run and therefore the coming quarter may reflect a slowdown and a subsequently fall in the cement prices. Also, high freight and input cost may erode the margins to some extent.

Expansion Plan
Shree Cement is currently expanding its cement producing capacity from 13.5 MTPA to 15.5 MTPA, expected to become operational by December 2013. The expansion would be completed in phases with the first grinding unit of 2 MTPA at Bihar expected to be commissioned by December 2013 and the second unit of 1 MTPA at Rajasthan by June 2014.