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Heidelberg Cement posted 9% growth in net profit to Rs 66.29 crore despite 6% decline in income from operation to Rs 509.77 crore for the fourth quarter ended March 2020. The topline was impacted as dispatches and production were suspended towards the end of the financial year due to the Covid-19 pandemic, while growth in bottom-line was due to lower fuel costs freight costs. Total sales volume declined 10% to 1.09 million tonnes (mt), while realization rose 5.8% to Rs 4,672 per tonne.
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 partially resumed from mid-April 2020. The suspension of operations combined various restrictions along with logistics constraints, will impact the financial performance of the Company during the quarter ending June 30, 2020. The Company is taking all possible steps to mitigate the impact on its business.
During the quarter ended March 2020, the Company completed de-bottlenecking of its cement grinding capacities in lmlai (Madhya Pradesh) and Jhansi (Uttar Pradesh). Post completion of the de-bottlenecking projects, the Company's total cement grinding capacity would stand at 6.26 million tonnes per annum.
Quarterly Performance
The Company income from operation declined 6% to Rs 509.77 crore for the fourth quarter ended March 2020, due to drop in sales volume offset by realization improvement. Total sales volume declined 10% to 1.09 million tonnes (mt), while realization rose 5.8% to Rs 4,672 per tonne.
Operating margin (OPM) increased by 200 bps to 25%, thanks to drop in power & fuel expense by 410 bps to 21.4%, raw material costs by 160 bps to 16.8%, and logistic expenses by 120 bps to 13.2% as a percentage to sales and net of stock adjustments. As a result, the operating profit (OP) climbed up 2% to Rs 127.34 crore.
Other income grew 48% to Rs 17.02 crore. With 1% jump in interest cost to Rs 16.25 crore and 8% rise in depreciation cost to Rs 25.73 crore, the Company booked 6% growth in PBT to Rs 100.58 crore. The tax outgo was up by 1% to Rs 34.29 crore. The effective tax rate fell by 180 bps to 34.1%.Thus, Net Profit inclined by 9% to Rs 66.29 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.
Dividend
The Board of Directors of the Company has recommended final dividend of Rs. 6 per share (i.e. 60%) on for the financial Year 2019-20, which shall be paid within 10 (ten) days from the date of approval by the shareholders in the Annual General Meeting of the Company. The above-mentioned final dividend is in addition to the interim dividend of Rs 1.50 per equity share (15%) already declared and paid to the shareholders during FY 2019-20; aggregating the total dividend for FY 2019-20 at Rs 7.50/- per equity share (75%).
The scrip hovers around Rs 157.65 (28 May 2020) on the BSE.
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