UltraTech Cement Limited India’s largest cement company Earnings Q4 FY18 Stock code: BSE: 532538 | NSE: ULTRACEMCO Reuters: UTCL.NS | Bloomberg: UTCEM IS/UTCEM LX
01 02 Macro and Update on industry update acquired assets 05 Contents Sectoral overview 03 04 Key updates Performance and highlights review GLOSSARY Mnt – Million metric tons, Lmt – Lac metric tons, MTPA – Million tons per annum, Q2 – July-September , Q3 – October-December, Q4 – January-March, CY – Current year period, LY – Corresponding period last year, FY – Financial year (April-March) Note: The financial figures in this presentation have been rounded off to the nearest Rs. 1 crore; 1 US$ = Rs. 64.35
Capacity GDP growth utilisation started for Q3 at picking-up across 7.2% sectors Macro indicators USD/INR WPI inflation remained at ~ 2.7% vs. range-bound 3.8% in Q3 3
Sectoral update – growth momentum continues Annual demand – industry is likely to achieve historical correlation with GDP after seven years 01 02 03 04 Individual home Government-led Builder (IHB) infrastructure Social housing – Low base segment in rural spending – most gaining areas – picking up effect significant growth momentum pace in the North driver and East 4
Sectoral update State/region-wise performance State/Region Vol. Gr. I LCH RH UH C Key drivers Haryana Infrastructure spends and Rural IHB Delhi + NCR Infrastructure spends Punjab Rural Housing and Commercial Himachal Pradesh Poor water availability Madhya Pradesh Governmental infrastructure spends Rajasthan Poor sand availability Uttar Pradesh Infrastructure spends and PMAY West Bengal Infrastructure spends and PMAY Bihar Infrastructure spends and IHB Jharkhand PMAY and IHB Odisha Infrastructure spends, PMAY & IHB Chhattisgarh Rural infrastructure and housing Consistent infrastructure spends and pick up in rural housing are key growth drivers I: Infrastructure, LCH: Low-cost housing, RH: Rural housing, UH: Urban housing, C: Commercial 5 PMAY: Pradhan Mantri Awaas Yojana, IHB: Individual Home Builder.
Sectoral update State/region-wise performance State / Region Vol. Gr. I LCH RH UH C Key Drivers Infrastructure spends and Affordable Maharashtra Housing Gujarat RERA impact on new projects launch Andhra Pradesh / Infrastructure spends and PMAY Telangana Housing and Commercial Karnataka Improving IHB demand Tamil Nadu Improving IHB demand Kerala Pick up in affordable housing demand and IHB demand 6 6 I: Infrastructure, LCH: Low-cost housing, RH: Rural housing, UH: Urban housing, C: Commercial RERA: Real Estate (Regulation and Development) Act, PMAY: Pradhan Mantri Awaas Yojana, IHB: Individual Home Builder.
Performance of acquired assets: achieved target a quarter ahead of schedule 01 02 03 04 Achieved: Achieved: Cost gap with Pet coke average Cash existing usage in kilns capacity break-even plants at ~75% utilization (debt funding narrowing - 80%) down of ~ 75% Conclusion: Completed integration in < 9 months. 7
Performance of acquired assets: What next? 01 02 03 04 Bring down Expand Enlarge Ensure costs to UltraTech dealer and synergic UltraTech Building retailer existence of standards Solutions network to acquired and (barring (‘UBS’) into increase existing structural newer market share plants differences) markets Conclusion: PBT break-even of acquired units by April-June 2019. 8
Another target conquered: benchmark in commissioning greenfield capacity For the first time ever a greenfield plant erected - 01 02 03 Clinker Clinker capacity: capacity: With distinct 2.5 mtpa 2.5 mtpa; At a market In record Cement benchmark leadership: Cement time < 365 capacity: cost of no other capacity: days 3.5 mtpa < $90 /t plant in the 3.5 mtpa vicinity Conclusion: Ready for demand up-cycle. 9
UltraTech: highlights and key developments for FY18 01 02 03 04 Strong volume Efficiency UltraTech growth – improvement Building Completed the carved out a program Solution integration of sizeable share continues to (‘UBS’) outlets acquired of incremental mitigate the increased to assets demand during impact of cost ~1600 the year increases 10
UltraTech: highlights and key developments for FY18 contd… 05 06 07 08 Achieved Dividend EBITDA stood at reduction in Cash Surplus @ Rs 10.50/ share Rs. 6478 Crs overall lead Rs. 2,811 Crs (payout ~ 15.6%) up 15% distance by ~ 3% 11
UltraTech: key performance highlights – Q4 Domestic sales volume (MnT) Turnover (Rs. Crs) +32 % growth +37 % growth 8881 17.64 13.35 6500 Q4FY17 Q4FY18 Q4FY17 Q4FY18 EBITDA (Rs Crs) Operating EBITDA (Rs./mt) +19 % growth +2% growth 922 1809 1518 908 Q4FY17 Q4FY18 Q4FY17 Q4FY18 12
Sales performance: solid growth MnT Q4 Annual Particulars % % CY LY CY LY Capacity (mtpa)* 85.0 66.3 28 85.0 66.3 28 Capacity utilisation 80% 82% (2) 71% 72% (1) Domestic sales 17.64 13.35 32 57.75 47.62 21 Exports and others 0.82 0.72 15 2.90 2.56 13 Total 18.47 14.07 31 60.65 50.19 21 Conclusion: UltraTech spreading its leadership footprint. 13 * As on 31st March
Key sales initiatives 01 02 03 04 Consistent focus Enhanced trade Cement consumption on rural markets UBS contribution off-take share in RMC increased: increased share in in overall sales over Q3 ~17% overall sales jumped ~16% ~ 100 bps to ~ 40% 14
Operating costs – unabated fuel prices 01 02 03 Logistics costs Energy costs Raw materials costs 34% 29% 14% y-o-y up 6% y-o-y up 17% y-o-y constant at Rs. 1166/t at Rs. 987/t at Rs. 473/t Source optimization and Rising fuel prices Increased diesel prices usage of alternate additives helped mitigate Pet coke usage ban in TPP Plant mix change cost pressures Conclusion: No respite in costs increase 15 For Grey Cement
Efficiency improvement programme: in focus Improved Lead Reduction in Increased Usage of thermal distances power usage of alternate power plant reduction consumption low-cost fuel additives performance (3%) (5%) (2%) (6%) (5%) Conclusion: Contribution to EBITDA ~ 9%. 16 Performance indicators for Q4 y‐o‐y basis (Grey cement)
Logistics cost trends Logistics Cost (Rs/t) 1166 Sequentially cost increased: 4% 1127 1104 • Increase in diesel prices by 8% • Poor rail network in Eastern India Q4 FY17 Q3 FY18 Q4 FY18 Y-o-Y cost increase: 6% • Change in sales pattern from ex- works to FOR ( ~3%) Logistics Costs v/s Diesel Prices 122 • Road Freight rates increasing due to increasing diesel prices 108 • Lead distance reduction offset 100 cost increase to some extent Q1 17 Q4 17 Q3 18 Q4 18 Diesel Prices (index) Logistics Cost (index) 17 Cost trends for grey cement
Energy cost trends Energy Cost (Rs/t) Y-o-Y costs escalated: 17% 987 949 4% • Pet coke prices increased 20% to 840 $104/t • Pet coke banned in TPPs • Savings from efficiency Q4 FY17 Q3 FY18 Q4 FY18 improvement programme: Energy cost v/s Pet coke Prices 194 o Efficiency gain in WHRS operations o Lower power consumption 145 o TPP operations improvement 100 Q1 17 Q4 17 Q3 18 Q4 18 Pet coke Price (Index) Energy Cost (Index) 18 Cost trends for grey cement
Actions taken to reduce debts 01 02 Released working Net debt reduction capital ~ Rs. 465 Crs ~ Rs 1050 Crs in Q4 over Q3 Net debt/EBITDA improved at 1.85x over peak of 2.10x in Q2 19
Income statement Q4 Rs. Crs Standalone Consolidated Particulars % % CY LY CY LY Revenues (net of taxes) 9298 6922 34 8881 6500 37 1887 1577 20 EBITDA 1809 1518 19 20% 23% (2) Margin (%) 20% 23% (3) Finance costs 344 167 335 153 501 356 (41) Depreciation 481 349 (38) 1042 1054 (1) PBT 993 1016 (2) Tax Expenses (Normalised) 318 328 3 316 328 3 PAT Normalised 724 726 - 677 688 (2) 315 - Extra-ordinary Items* 226 - PAT Reported** 446 726 (39) 488 688 (29) 16.2 26.4 (39) EPS (Rs.) 17.8 25.1 (29) PAT Normalised marginally lower despite of higher depreciation and interest cost 20 * Provision for stamp duty on acquired assets & assets impairment ** After extraordinary items (net of tax) and one time charge of deferred tax on opening liability due to change in effective income‐tax rate.
Financial position Rs. Crs Consolidated Standalone Particulars 31.03.18 31.03.17 31.03.18 31.03.17 26397 24402 25923 23941 Shareholder’s funds 19480 8474 17420 6240 Loans 3173 2773 3174 2774 Deferred tax liabilities 49051 35649 46517 32955 Sources of funds 42296 26039 Fixed assets 40782 24387 1036 1085 - - Goodwill 5453 8713 6163 9409 Investments 265 (188) Net working capital incl. derivative assets (428) (840) 49051 35649 Total application of funds 46517 32955 14062 (215) 12007 (2422) Net debt 21
Free cash flow- standalone Rs. Crs Particulars FY18 FY17 Operating Cash Profit (Net of Tax) 5684 4890 Change in Working Capital (608) 289 Cash Flow from Operations (I) 5076 5180 Capex for Expansion & Maintenance (II) (1935)* (1191) * Dividend Paid (III) (330) (311) Cash Surplus (I+II+III) 2811 3678 22 * Excluding Acquisition cost of Rs 16189 Crs
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