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Heidelberg Cement posted 38% decline in net profit to Rs 48.94 crore on 31% drop in income from operation to Rs 407.70 crore for the first quarter ended June 2020, amid severe disruptions in key markets and manufacturing centres due to the Covid-19 pandemic. The Company suspended manufacturing operations in its plants during the last week of March 2020 which marginally impacted the performance of the Company during the quarter and financial year ended. March 31, 2020. The operations were resumed in a phased manner with effect from April 20, 2020 under strict observance of guidelines issued by respective district administrations to mitigate the risk of COVID-19. The suspension of operations, together with intermittent restrictions impacted the financial performance of the Company during the quarter ending June 2020.
Total sales volume declined 31.9% to 0.857 million tonnes (mt), primarily due to the suspension of operations in April 2020, while realization rose 2.4% to Rs 4,741 per tonne.
Quarterly Performance
The Company income from operation declined 31% to Rs 407.70 crore for the first quarter ended June 2020, on drop in sales volume due to the Covid-19 pandemic. The Company suspended manufacturing operations in its plants during the last week of March 2020 which marginally impacted the performance of the Company during the quarter and financial year ended. March 31, 2020. The operations were resumed in a phased manner with effect from April 20, 2020 under strict observance of guidelines issued by respective district administrations to mitigate the risk of COVID-19. The suspension of operations, together with intermittent restrictions impacted the financial performance of the Company during the quarter ending June 2020.
Total sales volume declined 31.9% to 0.857 million tonnes (mt), primarily due to the suspension of operations in April 2020, while realization rose 2.4% to Rs 4,741 per tonne.
Operating margin (OPM) fell by 20 bps to 26.6%, as rise in employee cost by 120 bps to 6.6% offset by drop in power & fuel expense by 30 bps to 20.6%, fall in raw material costs by 80 bps to 17.4%, and logistic expenses by 10 bps to 13.6% as a percentage to sales and net of stock adjustments. As a result, the operating profit (OP) dropped 31% to Rs 108.33 crore.
Other income declined 17% to Rs 9.78 crore. With 19% fall in interest cost to Rs 15.99 crore and 1% drop in depreciation cost to Rs 27.63 crore, the Company booked 39% drop in PBT to Rs 74.49 crore. The tax outgo was down by 40% to Rs 25.55 crore. The effective tax rate fell by 80 bps to 34.3%.Thus, Net Profit declined by 38% to Rs 48.94 crore.
Annual Financial Performance
For the financial year ended March 2020 (FY 2020), income from operation of the company advanced by 2% to Rs 2,169.62 crore. OPM inclined by 170 bps to 24.3%, thus, OP rose by 9% at Rs 527.79 crore. Other income grew by 51% to Rs 52.73 crore. After accounting for finance charges (down 1% to Rs 73.85 crore), depreciation (up 7% at Rs 108.61 crore), the PBT inclined by 17% to Rs 398.06 crore. The tax outgo was up by 7% to Rs 130 crore. The effective tax rate fell by 280 bps to 32.7%. Thus, the Net Profit grew by 21% to Rs 268.06 crore.
The scrip hovers around Rs 181.35 (22 July 2020) on the BSE.
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