Prism Johnson Limited
Cement Business Pulls Down Overall Performance
Prism Johnson’s Q2FY19 results were below market estimates, with EBITDA coming in at Rs.803 Million (market est: Rs.1,107Million) and OPM at 6% (market estimate: 8.7%) due to the disappointing performance of the cement business (EBITDA/t declined Rs.439 QoQ).
Cement sales volumes were up 20% YoY at 1.35 Million Tonnes. Cement realization was up 10.6% YoY (down 0.6% QoQ). Operating expenses per Tonne was up 6.5% YoY; however, higher realization/cement sales volumes led to a 3.3 pp YoY improvement in OPM. EBITDA/tonne was at Rs.550, up 49.8% YoY.
Poor perfrmance was due to higher operating expenses in the cement segment which was the bane of all cement companies who have so far posted their results barring a few.
Dalmia Cements Excels
Dalmia Bharat Posts Q2 Results
India’s fourth largest cement manufacturer, Dalmia Cements posted Q2FY19 results that resonated with other industry majors. Double-digit volume growth drove cement sales, but profits took a beating as the increase in operating costs downed margins.
Q2 revenue rose 13% YoY to Rs.2,158 crore. The company sold 4.5 MMT of cement during the 2nd quarter, a volume growth of 13%. Strong demand across its key operating markets ie.,east and south drove cement volume growth in Q2.
EBITDA margin declined 330 bps YoY as the sector is facing challenging times on the cost front. Power and fuel costs as well as freight expenses have witnessed a sharp rise in the last 12 months. Despite stable realisation, EBITDA per tonne dipped to Rs. 944 as unitary cost increased 4 %percent QoQ. Operational performance was significantly better than UltraTech Cement, ACC and Ambuja Cements. EBITDA per tonne continues to be much ahead of its peers.
Amalgamation with Orrisa Cement (now OCL India) is complete. The company plans to list OCL in Q3 FY19 and expects the combined merged entity to be listed in early Q4 through a share swap agreement. The company has also completed acquisition of Kalyanpur Cements (1.1 MPTA) and the subsidiary has been renamed DDSPL. The management has been able to revive clinker production from this plant over five months and aims to start commercial operations from November. The company is still awaiting the National Company Law Tribunal and Supreme Court’s final decision on Murli Industries and Binani Cement, respectively.
Demand for cement has been fairly strong in H1 FY19. However, pricing power remains elusive as industry leaders prefer to chase volumes. Prices as well as demand should remain stable in the run-up to general and state elections.
M.P.Birla Group
Birla Corp Posts Q2 Results
For the quarter ended September 30, 2018, Birla Corp reported a near 55 % dip in standalone net profit to Rs.2.00 crore, against Rs.4.40 crore in the year-ago-period. Total income during the period stood at Rs.999 crore. On a consolidated basis, the company’s net profit increased manifold to over Rs.16 crore in Q2 FY19 (Rs.1.46 crore). Net income saw a 19 % jump YoY to Rs.1,485 crore. Cement production during the quarter stood at 30.97 lakh tonnes, compared to 26.84 lakh tonnes in the year-ago-period. Cement sales for the period stood at 30.68 lakh tonnes.
The second phase capacity expansion at the Kundanganj unit of the company (at Uttar Pradesh) will be carried out. A third production line, with an annual capacity of 1.2 MPTA, will be installed at an expected investment of Rs.250 crore. The Kundanganj unit’s current capacity is 2 MPTA.
