Analyst Meet / AGM 19-Aug-17
Conference Call
JK Cement
Expects 7-8% volume growth in Q2FY18
The company has conducted a conference call on 16 August 2017 to discuss the financial performance for the first quarter ended June 2017 and way forward. The call was addressed by Mr A. K. Saraogi, President (Corporate Affairs) & CFO and Mr Prashant Seth, VP (Commercial), of the company.
Key Points from the discussion:
The company also sold 133kt clinker.reported 16% jump in top line to Rs 104 crore. Top line growth was led by an impressive growth in grey cement sales. Grey Cement sales increased by ~15% to 1.86MT, however white cement sales inclusive of wall putty at 0.26MT registered flattish growth. The company also sold 133kt clinker. The company grey cement production grew 9% to 1.75mt.
The company regional sales mix in Q1FY18 remained broadly same at ~75% sales from Northern plants, while balance was from its Karnataka plant. North plants operated at ~75% utilisation and at ~60% in South in Q1FY18.
The company white cement + wall putty volumes remained flat at 256KT, largely due to GST]related destocking. White cement margins were impacted by low volumes on account of destocking led by GST and increase in petcoke prices. This, coupled with weak realisation and rising costs, led to the segmentfs EBITDA dipping 9%. The company expects recovery in volume growth and white cement prices going forward with EBITDA margin reverting to ~28%.
The company average pet coke cost in Q1FY18 was Rs 7600/t, an increase of ~Rs 2,000 versus Q1FY17. The company expects it to increase further by ~Rs 200/t in Q2FY18, due to impact of high cost of imported pet coke.
The company plans a capex of Rs 200-250 crore for FY18. Of this, Rs 25 crore plans for putty expansion at Katni, Rs 30-40 crore to acquire mining land, and balance Rs 160-175 crore as maintenance and other environment related improvements at existing plants.
The company expects Katni expansion will be completed by June 2018, post which capacity of putty will be 0.9mt. Utilization level at Katni is more than 75%.
The company expects raw mill silo construction work at South plant to start at the beginning of FY19.
The company expects ~7-8% volume growth in Q2FY18.
The Company gross debt as of 30 June 2017, stood at Rs 2420 crore and net debt of Rs 1950 crore. Additionally, UAE subsidiary had total outstanding debt of US$90 million. In Q1FY18, net debt reduced by Rs 130 crore compared to Q4FY17. The Company expects to repay about Rs 200]250 crore annually over the next few years.
UAE operations: The company UAE operations recorded volume of 75KT in the June quarter, while revenue and EBITDA stood at AED31.9mn and AED5mn, respectively. Operations continued to suffer due to low demand and increased pricing competition in the region.
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