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Informist, Tuesday, Aug 6, 2024

--Shree Cement Apr-Jun net profit 3.18 bln rupees

--Analysts saw Shree Cement Apr-Jun net profit 5.58 bln rupees

--Shree Cement Apr-Jun net profit 3.18 bln rupees vs 5.81 bln

--Shree Cement Apr-Jun revenue 48.35 bln rupees vs 49.71 bln

--Shree Cement: Apr-Jun operating margin 22% vs 29% quarter ago

--Shree Cement: Apr-Jun operating margin 22%, flat on year

--Shree Cement: Apr-Jun EBITDA 9.16 bln rupees, down 2% on year

--Shree Cement: Apr-Jun sales volume 9.64 mln tn, up 8% on year

--Shree Cement: Apr-Jun mkt conditions tough due to sluggish demand

By Rajesh Gajra

MUMBAI – Shree Cement Ltd's earnings performance for the June quarter was weak, largely due to sluggish demand and weak realisations. The third-largest cement company by capacity missed the Street's estimates on topline and net profit.

The company's net profit for the quarter fell sharply by 45.3% on year to 3.18 bln rupees, considerably below analysts' average estimate of 5.58 bln rupees. The company's revenue from operations declined 2.7% to 48.35 bln rupees. The topline was also below the Street's estimate of 50.34 bn rupees.

Sequentially, Shree Cement's net profit fell 52% and revenue fell 4.7%.

Managing Director Neeraj Akhoury said in a post-earnings press release that the company had to navigate challenging market conditions during the June quarter amid "sluggish demand due to general elections and extreme weather."

The near 3% on-year decline in Shree Cement's revenue for Apr-Jun was despite sales volume increasing 8% on year to 9.64 mln tn. This indicates that the company's selling price for cement was much lower than in the same quarter a year ago. The company said the sale of premium cement products contributed 7.6% to total sales volume in the June quarter.

The cement major also faced challenges on the operating costs front owing to which the earnings before interest, tax, depreciation, and amortisation declined 2% on year to 9.16 bln rupees. The operating margin was flat on year at 22% but significantly lower than 29% in the previous quarter.

Freight and forwarding expenses, which made up for 24% of total expenses, were up nearly 5% on year to 11.15 bln rupees.

The cost of materials consumed, which had an 8% share in total expenses, increased 5% on year to 3.72 bln rupees. Employee benefit expenses were up 4.1% at 2.45 bln rupees. The other expenses of Shree Cement rose nearly 14% on year to 7.47 bln rupees.

The 45% on-year fall in net profit was on account of the EBITDA decline, as well as a rise of 108% in depreciation and amortisation expenses to 6.43 bln rupees and a 17% fall in other income to 1.35 bln rupees.

During the June quarter, the company commissioned its integrated cement unit in Guntur district of Andhra Pradesh with an annual cement production capacity of 3 mln tn. Akhoury said in the press release that Shree Cement will sustain its focus on raising its total capacity in order to gain market share.

The company anticipates a rebound in cement demand "driven by enhanced infrastructure allocation in the Union Budget, rising housing demand, and expected growth in the rural sector." It said the 11-trln-rupee capital expenditure announcement in the Union Budget for 2024-25 (Apr-Mar) signified the government's commitment to modernising India’s infrastructure through various projects and allocations. This, together with 30 mln additional houses to be built under the Pradhan Mantri Awas Yojana, will drive demand for cement and other building materials, the company said.

Today, shares of Shree Cement ended 2.7% lower at 26,101.35 rupees on the National Stock Exchange.  End

Edited by Rajeev Pai

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