Birla Corp. posts strong Q4 on high volume growth

Birla Corp. posts strong Q4 on high volume growth

Cement manufacturer, Birla Corporation, posted strong operational performance backed by double-digit volume growth and cost control measures. Driven by 13 per cent increase in cement volumes to 3.85 million tonne (MT), it posted a similar revenue growth year-on-year). Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 20 per cent as margin expanded by 320 basis points (100 bps=1 percentage point) to 16.5 per cent. However, the net profit was almost flat after higher tax outgo.

Stable raw material costs, along with internal operating efficiencies, helped boost profitability metrics of the company for January-March quarter. Despite a sharp rise in unitary power and fuel costs (up 13 per cent YoY), the company reported an EBITDA per tonne of Rs 804, which is a multi-quarter high.

Cement prices continued to remain firm during the quarter and strong demand for cement in the central region aided volumes. In terms of distribution channel, the share of trade segment touched 80 per cent of sales volumes, of which the premium segment accounted for 38 per cent.

The company is setting up a waste heat recovery system as well as a solar power plant to reduce its power and fuel expenses. These plants are expected to be operational by H2 FY20 (2019-20) . Taking advantage of higher volumes, capacity utilisation for the quarter stood at 99 per cent and the same for the full year was close to 88 per cent.

The company's jute division (5 per cent revenue share) continues to remains a drag on margin and profitability. In Q4, the segment's EBIT margin further fell to just a per cent from three per cent in Q3.

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