Standalone Q1 FY2012 vs. Q1 FY2011:
- Gross Sales increased by 24%
- Electrode sales volume increased by 33%
- Average capacity utilization up from 59% to 79%
Editor Synopsis
Q1FY12 vs. Q1FY11 standalone performance
- Gross Sales at Rs 335 crore against Rs 271 crore; up 23.6%
- EBITDA stood at Rs 68 crore against Rs 62 crore; an increase of 9.7%
- Net Profit at Rs 37 crore vs. Rs 34 crore, up 7.2%
- Basic EPS at Rs 1.89 against Rs 1.99
Graphite India Limited, the largest Indian graphite electrode producer (referred to as “Graphite India” or the “Company”, NSE: GRAPHITE, BSE: 509488), announced its Unaudited Standalone First Quarter Results, in accordance with Indian GAAP.
Commenting on the results and performance, Mr. K. K. Bangur, Chairman of Graphite India said: “Graphite India had a strong start to the fiscal year with significant volume growth, both on a year over year and sequential basis. Electrode prices have remained relatively stable since the beginning of this year. Continued strength in global steel production, particularly through the EAF route, is expected to benefit the electrode industry going forward. We continue to retain flexibility to capitalize on this opportunity through both leading industry margins as well as a conservative balance sheet.”
Business Performance
Q1 FY2012 Gross Sales increased by 23.6% compared to Q1 FY2011. This was primarily due to increased market demand for electrodes driving significantly higher volumes. Electrode sales volumes in the quarter increased by 33% compared to the prior year. This increase was driven by both the Indian market as well as exports. Sales volumes in India grew by 55% and export sales volumes grew by 19% during the quarter. Electrode prices remained relatively steady on a year over year and sequential basis.
Q1 FY2012 Operating Profits increased by 9.7% compared to Q1 FY2011. This growth was primarily due to higher volumes, offset to some extent by an increase in input costs other than needle coke. Average capacity utilization increased from 59% in Q1 FY2011 to 79% in Q1 FY2012. Electrode production increased by 34% compared to the prior year.
Q1 FY2012 Net Profit increased by 7.2% as compared to Q1 FY2011. This was primarily due to higher Operating Profits, offset to some extent by an increase in interest expense. Interest expense increased from Rs. 0.52 crore in Q1 FY2011 to Rs. 2.64 crore in Q1 FY2012, as a result of an increase in working capital requirements and increasing interest rates.
Net Sales growth in the non-electrode segments remained relatively flat during Q1 FY2012. Strong growth in impervious graphite equipment and glass reinforced plastic pipes was offset by a decline in the Steel and Power segments. Growth in the Steel segment was impacted primarily by a lock out at the Titilagarh steel plant. The lock out was lifted on June 9, 2011.
Balance Sheet
Graphite India remains focused on maintaining a conservative balance sheet in order to preserve flexibility. As of June 30, 2011, the Company had total debt of Rs. 235 crore, cash and cash equivalents of Rs. 217 crore, net debt of Rs. 18 Crore and Net Worth of Rs. 1,440 crore.
Strategic Initiatives and Performance Outlook
The electrode capacity expansion by 20,000 MT at Durgapur Plant is progressing well and is expected to be completed by Q4 FY2011-12. The Company had earlier signed an agreement with KSK Energy to obtain low cost power for its Nasik plant. This supply is now expected to commence from Q2 FY2012.
Steel consumption2 is expected to grow 5.9% y-o-y in CY2011 and 6.0% y-o-y in CY2012. Strong economic growth coupled with large infrastructure needs and expansion of industrial production in India is expected to drive domestic steel demand. India’s steel demand is projected to grow by 13.3% y-o-y in CY2011 and 14.3% y-o-y in CY2012. Average global steel production capacity utilization (currently 82-83%) is expected to remain high due to this increased demand, which will directly benefit the graphite electrode industry.
Graphite India remains well positioned to capitalize on this expected demand through increased capacity and continued focus on cost efficiency and productivity. The Company is targeting a consolidated capacity utilization of approximately 85-90% in FY2012. Graphite India has also taken steps towards ensuring stability in key input costs, particularly needle coke.
