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Analyst Meet / AGM
08-Feb-20
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Conference Call
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Essel Propack
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Efficient capital allocation leading to cut debt and improvement in return ratios
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Essel Propack conducted conference call to discuss the financial results and performance of the company for the quarter ended December 2019. Mr. M.R. Ramasamy – COO, Mr. Vinay Mokashi – Wholetime Director and Mr. Parag Shah- CFO of the company addressed the call
Highlights of the Concall
- Post Blackstone as the new controlling shareholder the company is on mission to deliver capital efficient, consistent earnings growth. For this it has revamped the board with fit-for-purpose professionals, strengthened the management team, and engaged Blackstone's global advisor network
- The company has Identified key levers to execute its mission - accelerated growth in Personal Care, Continued leadership in Oral Care, Innovation and sustainability solutions and Prudent capital allocation across regions
Q3FY20 revenue growth of 2.4% was led by strong growth in Europe (12.4% y-o-y) across Oral and Personal Care categories despite tough macro economic conditions in India and China and 1.5% revenue growth impact due to pass through of lower raw material prices to contracted customers.
- EBITDA margin expansion of 328 bps to 22.2% was driven by productivity improvement initiatives
- Capex spent in FY19 was Rs 304 crore. Capex spent in 9MFY20 was Rs 96 crore. As a result the return on capital increased from 16.7% to 17.8% and net debt has reduced to Rs 361 crore at the end of Q3FY20 from Rs 614.9 crore at the end of Q3FY19
- Variation to key raw material prices i.e. polymer prices does not translate to margin variations as the company has presence in end to end value chain and being a valued added partner to many of its customers. The company gross margin has remained in a narrow band despite major variations in polymer prices in last eight quarters.
- Personal Care in 9MFY20 contributed to 45% of tube revenue compared to 42% in 9MFY19
- Personal care segment grew 14% to Rs 854 crore during 9MFY20 compared to 9MFY19 led by 6% growth in Amesa, 12% growth in EAP, 23% in Americas and 20% in Europe.
- Sales from the Amesa geography stood at Rs 251.56 crore, down by 1% YoY in Q3FY20 and accounted for 34% of the total sales. PBIT from the same stood at Rs 36.91 crore up by 1% YoY and accounted for 37% of total PBIT with PBIT margins at 14.7%
- Sales from the EAP geography stood at Rs 173.99 crore, up by 1% YoY in Q3FY20 and accounted for 24% of total sales and PBIT from the same stood at Rs 32.71 crore up by 2% YoY with PBIT margin at 18.8%.
- Sales from the America geography stood at Rs 145.66 crore up down 1% in Q3FY20 and PBIT from the same stood at Rs 21.52 crore up by 30% YoY. PBIT margin stood at 14.8%
- Sales from the EU geography stood at Rs 161.76 crore up by 12% YoY in Q3FY20 and PBIT stood at Rs 9.73 crore up by 497% with PBIT margin at 6%.
- The company feels it has strong business pipeline across regions to enable continued growth momentum
- Oral care growth fell 1.5% in India while personal care grew 6% during the quarter.
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