Shree Renuka Q4 net loss at Rs 615.8 cr

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Shree Renuka Sugars , country's largest sugar company by market cap, has reported a dismal performance in the quarter ended September 2011 due to forex loss of Rs 569.8 crore.

Its consolidated net loss stood at Rs 615.8 crore in the fourth quarter of FY11 as against profit of Rs 127.9 crore in the corresponding quarter of last fiscal. Adjusted net loss came in at Rs 46 crore.

Sales fell 5.1% to Rs 2,334.9 crore from Rs 2,459.8 crore during the same period.

EBITDA dropped 17.8% to Rs 244 crore in the July-September quarter of 2011 versus Rs 297 crore in a year ago period. Operating profit margin grew at 10.5% versus 12.1% year-on-year.
 
Interest cost moved up sharply by 63.5% to Rs 192 crore from Rs 117.7 crore year-on-year while on quarter-on-quarter basis - it rose 18.5%.

Depreciation cost jumped 53% to Rs 225.1 crore from Rs 147.1 crore year-on-year whereas on quarter-on-quarter basis - it went up 25.5%.

This increase was due to the commissioning of Kandla refinery (1 million ton per annum) and 40 MW cogen plant in Q4.

Foreign research firms downgraded the stock post results. Merrill Lynch (ML) and CLSA downgraded the stock from buy to under-perform. ML has cut target price to Rs 38 from Rs 88 while CLSA reduced to Rs 56 from Rs 75 a share.

Domestic / international break up

Domestic (YoY)
* Sales down 21.7% YoY at Rs 1127.3 crore versus Rs 1439.3 crore
* OPM at 4.6% versus 2.3%
* Net loss of Rs 3.2 crore versus profit of Rs 8.1 crore

International
Renuka Do Brazil (YoY)
* Sales up 12.8% at Rs 688.3 crore versus Rs 610.1 crore
* OPM down 12% YoY at 17.5% versus 29.5%
* Net loss of Rs 611.6 crore versus profit of Rs 47.1 crore
Vale
* Sales up 32% at Rs 221.4 crore versus Rs 166.8 crore
* OPM up 15.2% YoY at 45.6% versus 30.4%
* Net loss of Rs 28.4 crore versus profit of Rs 22.9 crore

Q4 - Dismal Performance
* Offseason in the domestic business, so lower contribution from co-generation and distillery
* Margin contraction in the international biz + coupled with interest cost and forex losses

Brazilian biz
* Was impacted by frost and infrequent rainfall -- steep drop in cane yields
* Renuka Do Brazil cane yield was down almost 30% at 59 tons/hectare from the normalized 80 tons/hectare
* Renuka Do Brazil was impacted more due to aging cane (Average age of 3.7 year); Vale cane plantation is 1.5 year old

Domestic
* Sugar margins at 2.8%; earnings of Rs 17 crore on sales of Rs 600 crore   * Co-generation makes a loss of Rs 1.5 crore
* Ethanol contributes Rs 18.6 crore on sales of Rs 109 crore (Ethanol realizations have moved to Rs 29/l+ (Crude)

SY12 Crushing Commencement 

* Cane prices are on in Maharashtra - Expected finalization in a week

* Maharashtra crushing has already been delayed by a month now - Farmers agitating for a hike in cane prices

* Further delays will start impacting yields now

* Karnataka cane prices stable at Rs 240/quintal

* SY12 production expected at 25 - 26 mn tons

Leverage

* Consolidated debt at Rs 8610 crore; domestic - Rs 3360 crore / international at Rs 5250 crore

* Proceeds will be used to pare down in the international debt