Ultratech Cement Limited · NSE:ULTRACEMCO
Ultratech Cement — Q1 FY20 Earnings Presentation
33 slides from Ultratech Cement's earnings presentation, Aug 8, 2019
Slide 1: Cover letter to BSE and NSE: Investor Presentation
ADITYA BIRLA 81h August, 2019 BSE Limited The Manager Corporate Relationship Department Listing Department Phiroze Jeejeebhoy Towers, The National Stock Exchange of India Limited Dalal Street UExchange Plaza", Bandra-Kurla Complex, Mumbai 400 001 . Sandra (East), Mumbai 400 051 . Tel.: 2272 1233/34
Slide 2: India's largest cement company: Earnings, Q1 FY20
India’s largest cement company Earnings, Q1 FY20 Stock c o de: B S E : 5 32538 | NSE: U L T R A C EM C O | R e uter s: U T C L . N S Bloomberg: U T C E M I S / U T C EM L X
Slide 3: Tribute to Shri B. K. Birla
Shri B. K. Birla was a visionary who combined his business acumen underlined with a high ethical commitment and humility He laid down the foundation of Aditya Birla Group’s Cement Business We dedicate ourselves to the values and ideals he epitomized SHRI BASANT KUMAR BIRLA (1921-2019)
Slide 4: Contents
Macro indicators and sectoral Performance updates Contents Key updates and Sectoral guidance highlights GLOSSARY MNT – Million metric tons LMT – Lac metric tons MTPA – Million tons per annum Q1 – April-June Q2 – July-September Q3 – October-December Q4 – January-March CY – Current year period LY – Co
Slide 5: Macro indicators
WPI at 2.6% FY19 GDP growth v/s Q4 FY19: 2.9% rate lower at 6.8% v/s 7.2% in LY Macro indicators INR range-bound Average crude price against US Dollar increase of ~ 8% v/s Q4 FY19 UltraTech Cement Limited 4
Slide 6: Sectoral update
Sectoral update Industry Q1 volume muted following a 7-quarter rally Industry growth & Capacity utilization trend * Cap.Utilisation Industry growth trend 14.8% 15.5% 14.0% 14.5% 74% 12.0% 75% 67% 66% 75% 66% 67% 60% 70% 10.00% 5.9% 1.5% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 (-) 3% to
Slide 7: Sectoral Update: Key growth drivers
Sectoral Update: Key growth drivers Infrastructure Low-cost housing Housing Industrial & commercial Growth drivers ~23% ~13% ~52% ~12% Growth Road construction Slow down in Labour scarcity No new private continuing - work started Key contributors Andhra Pradesh due to general sector capex for Samrud
Slide 8: Sectoral Update: State / Region wise performance
Sectoral Update State / Region wise performance Vol. State/Region I LCH RH UH C Key drivers Gr. Haryana Slow release of Government funding Delhi + NCR Labour scarcity Punjab Labour scarcity and sand availability Himachal Pradesh Rural Housing and LCH Rajasthan Change in State Govt. and Labour scarci
Slide 9: Sectoral Update: State / Region wise performance
Sectoral Update State / Region wise performance State / Region Vol. Gr. I LCH RH UH C Key Drivers West Bengal Government uncertainty and Sand Bihar Labour scarcity Jharkhand Government funding issue Odisha Labour scarcity and Cyclone Fani Chhattisgarh Labour scarcity and shortage of funds East Andhr
Slide 10: UltraTech: Successful integration of the biggest acquisition
UltraTech: Successful integration of the biggest acquisition in Indian cement industry … A vision comes true New markets. New work environment. New people •Achieved • Plants are PBT Performance trends of the acquired capacity : 21.2 mtpa using ~ 87% break-even low cost fuel as planned • Aggregate re
Slide 11: UltraTech: Successful integration of the biggest acquisition
UltraTech: Successful integration of the biggest acquisition in Indian cement industry … A vision comes true Next focus areas Commissioning Operationalize Invest in waste Minimize the and ramp-up of Dalla Super heat recovery cost difference Bara grinding clinker plant systems and with UltraTech unit
Slide 12: UltraTech Nathdwara ….BEAT the BEST
UltraTech Nathdwara ….BEAT the BEST Settled all liabilities agreed in the Resolution Plan Achieved PBT break-even Key within two quarters Integration Success of acquisition - An industry benchmark UltraTech Cement Limited 11
Slide 13: UltraTech Nathdwara… Next priorities
UltraTech Nathdwara… Next priorities Enhance Monetization of non-core manufacturing Objective capacity to meet assets growing demand to graduate these assets into the best performing Leverage league at Implement synergies with the existing schemes to UltraTech enhance UltraTech efficiencies network
Slide 14: Century Cement Assets… Merger status
Century Cement Assets… Merger status Scheme approved by NCLT fixed National Appointed Date Company Law Tribunal (NCLT) as 20th May, on 3rd July, 2018 Initiated 2019 ground work for synergies Scheme likely to become with UltraTech effective in Q2FY20 following remaining regulatory approvals UltraTech
Slide 15: UltraTech Q1 FY20 performance
UltraTech Q1 FY20 performance Turnover (Rs. Crores) Operating EBITDA (Rs. Crores) 2,652 10,299 2,282 9,622 8,354 1,624 Q1 19 Q4 19 Q1 20 Q1 19 Q4 19 Q1 20 Operating Margin (%) PAT (Rs. Crores) 28% 1187 22% 19% 988 598 Q1 19 Q4 19 Q1 20 Q1 19 Q4 19 Q1 20 Achieved Operating EBITDA per ton of Rs. 1466/
Slide 16: Focused approach to moderate debt and enhance liquidity
Focused approach to moderate debt and enhance liquidity Debt Profile 98.8@ 98.8 98.8 89.0* 89.0 70.3 21,798 19,593 18,565 15,790 14,062 (215) Mar'17 Sep'17 Mar'18 Dec'18 Mar'19 Jun'19 Consolidated Net Debt (Rs. Crores) Consolidated Cement Capacity (MTPA) * Acquisition of 21.2 mtpa capacity in Jun’17
Slide 17: UltraTech: Q1 FY20 performance drivers
UltraTech: Q1 FY20 performance drivers Blended Premium Retail UBS1 Cost products products Higher Total outlets management Improved Increase in penetration in increased Reduction in sales – sales volume retail markets to ~ 1950, variable costs ~ 28% v/s + 1% bps v/s + 20% v/s by 1% v/s 1% v/s Q1 FY19
Slide 18: Sales performance … Q1
Sales performance … Q1 MnT Particulars CY LY % Domestic sales 17.26 16.83 3 Exports and others 0.60 0.65 (7) Total 17.86 17.48 2 Temporary slowdown in line with the overall economy India operations performance UltraTech Cement Limited 17
Slide 19: Operating costs
Operating costs 19% 32% 29% of total of total of total cost cost cost Logistics cost: Energy cost: Raw materials cost: Declined YoY 5% Declined YoY 2% Declined YoY 2% to Rs. 1140/t to Rs. 1011/t to Rs. 489/t - Lower diesel prices - Reduction in fuel - Increase in production prices of composite cemen
Slide 20: Logistics cost trends
Logistics cost trends Logistics Costs (Rs/t) YoY cost reduced : 5% 1199 5% Costs Benefit from axle load relaxation : 2% 1146 Reduction in diesel prices : 4% 1140 Improved lead distance : 6% - Synergies with acquired and newly commissioned capacities. Some cost benefit eroded following Q1 19
Slide 21: Energy cost trends
Energy cost trends Energy Costs (Rs/t) YoY costs declined : 2% 1057 4% Increase in usage of green power : 1028 - Q1 FY20 ~ 9% v/s ~ 7% in Q1 FY19 1011 Reduction in power consumption : 2% Increase in power plant efficiency : 100 bps Increase in use of low cost fuel (pet coke + high CV coal) Q
Slide 22: Raw material costs
Raw material costs Raw Materials Costs (Rs/t) YoY cost declined : 2% 501 489 472 Lower usage of slag with production of composite cement Optimized usage of high cost additives QoQ cost up : 4% Increase in average cost of fly ash : +8% Q1 19 Q4 19 Q1 20 - Long distance procurement Conversion Ra
Slide 23: Other cost trends
Other cost trends Other Costs (Rs/t) QoQ cost up : 16% 669 561 575 Preponed annual kiln shut down at some plants : - Shutdowns-10 Kilns v/s 3 Kilns in Q4 LY - Cost impact : Rs. 45/t Q1 19 Q4 19 Q1 20 Impact of operating leverage due to lower sales volume (fixed overheads) : Rs. 45/t PP Granules
Slide 24: Ind AS 116 – Leases
Ind AS 116 – Leases Background and Applicability The Ministry of Corporate Affairs notified Ind AS 116 – Applicable w.e.f. 1st April, 2019 Ind AS 116 requires long term leases (> 12 months) and non-cancellable to be recognized as an assets (Right of Use – Background “RoU”) and corresponding leas
Slide 25: Ind AS 116 – Impact in Q1 FY20 Income Statement
Ind AS 116 – Leases UltraTech: Impact in Q1 FY20 Income Statement Rs. Crores India Consolidated Particulars Remarks Operations Reduction in freight & forwarding expenses and Power & fuel expenses on chartered ships + 43 EBITDA + 35 Reduction in other expenditure related to rent expenses for land
Slide 26: Q1FY20 : Income Statement
Q1FY20 : Income Statement Rs. Crores Standalone India Operations* Particulars CY LY % CY LY % Revenues (Net of Taxes) 9648 8354 15 9622 8354 15 Operating Income 146 179 (18) 149 179 (17) Other Income 154 73 110 131 73 80 Total Income 9948 8607 16 9902 8607 15 Expenses : Raw Materials Consumed 1182
Slide 27: Q1FY20 : Income statement
Q1FY20 : Income statement Rs. Crores Consolidated Standalone Particulars CY LY % CY LY % 10027 8720 15 Revenues (net of taxes) 9648 8354 15 131 73 80 Other Income 154 73 110 2840 1763 61 EBITDA 2704 1697 59 28% 20% 8 Margin (%) 28% 20% 8 441 349 (27) Finance costs* 370 336 (10) 599 507 (18) Deprec
Slide 28: EBITDA Trends
EBITDA Trends Rs. PMT 1539^ 73 1129 1122 1051 1036 58 968 992 1466^ 132 971 81 906 98 81 42 842 61 1072 990 85 939 970 929 911 69 907 821 773 FY15 FY16 FY17 FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19 FY19 Q1FY20 Operating Profit Other Income Total EBITDA ^ Excl. impact of Ind AS 116 (Lease Accounting) QoQ EBI
Slide 29: Financial position
Financial position Rs. Crores Consolidated Standalone Particulars 30.06.19 31.03.19 30.06.19 31.03.19 29542 28401 Shareholders’ funds 29122 27948 22697 22818 Loans 17999 18118 1154 - Lease liability (Ind AS 116) 894 - 3722 3542 Deferred tax liabilities 3730 3544 57115 54761 Sources of funds 51745 49
Slide 30: Free Cash Flow
Free Cash Flow Rs. Crores Consolidated Particulars Standalone 2189 Operating Cash Profit (Net of Tax) 2152 (901)* Change in Working Capital (852)* 1288 Cash Flow from Operations (I) 1300 (295) Capex (II) (280) 992 Cash Surplus (I+II) 1021 * Planned increase in pre-monsoon inventories Focus on deleve
Slide 31: Sectoral outlook
Sectoral outlook Demand expected to grow in line with national GDP growth rate Demand Government’s pro-growth stance drivers Thrust on infrastructure development Increased plan outlay for social housing program in Phase 2 Pick-up in rural housing demand Likely reduction in the benchmark in
Slide 32: We deliver what we promise
“We deliver what we promise mG
Slide 33: Disclaimer
DISCLAIMER Statements in this “Presentation” describing the Company’s objectives, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Impor