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Higher costs dented the performance of Shree Cement in the quarter ended June 2017. Shree Cement has posted 13% slide in net profit to Rs 440.11 crore in spite of 16% jump in total income from operation to Rs 2864.54 crore for first quarter ended June 2017. The surge in freight & forwarding expenses, power & fuel expenses and raw material costs resulted in the contraction in OPM by 590 bps to 23.7%. Thus, operating profit shrank by 7% to Rs 679.96 crore.
Performance for the quarter ended June 2017
Total income from operation (including the power segment revenue) inclined 16% to Rs 2864.54 crore for the quarter ended June 2017. The growth in topline was aided by jump in revenue from cement segment by 22% to Rs 2768.79 crore (89% of total revenue) partially offset by loss in power business segment by 11% to Rs 355.67 crore (11% of total revenue).
The Operating Margin (OPM) reduced by steep 590 bps to 23.7%. The reduction in OPM was due to spike in freight & forwarding expenses by 410 bps to 22.1%, power & fuel cost by 270 bps to 16%, and raw material cost by 90 bps to 7.4% as percentage to sales and net of stock adjustments. However, employee benefit cost fell by 30 bps to 5.2% during the period. As a result, the operating profit dropped 7% at Rs 679.96 crore.
The other income inclined 34% to Rs 130.96 crore. The interest cost rose by 19% to Rs 32.90 crore and depreciation went up 50% to Rs 231.15 crore. Thus, the PBT declined by 16% to Rs 546.60 crore. The net tax expenses was down 24% Rs 106.49 crore. The effective tax rate for the quarter was down 210 bps to 19.5%. Thus, the Net profit fell 13% to Rs 440.11 crore.
Annual Financial Performance
For the financial year ended March 2017 (FY 2017), total revenue (including the power segment revenue) inclined 20% to Rs 9496.52 crore. The gain in topline was due to jump in revenue from cement segment by 25% to Rs 8924.11 crore (86% of total revenue) while power business segment revenue declined by 7% to Rs 1455.89 crore (14% of total revenue).
The Operating Margin (OPM) expanded by 260 bps to 22.3%, thus, the operating profit grew by 34% at Rs 2367.23 crore. Other income dropped 29% to Rs 507.71 crore. The interest cost increased by 27% to Rs 129.42 crore. The depreciation went up 14% to Rs 1214.71 crore. Thus, the PBT before EO gained 17% to Rs 1530.81 crore.
EO expenditure was NIL as against EO outgo of Rs 23.99 crore in the corresponding previous period, as a result, PBT after EO rose by 19% to Rs 1530.81 crore. With the tax outgo of Rs 191.70 crore as against tax outflow of Rs 36.41 crore corresponding previous period, the net profit rose by 7% to Rs 1339.11 crore.
The scrip is currently trading at Rs 18,638.55 (31 July 2017) on the BSE.
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