Volumes growth to be better in June: HeidelbergCement

Operating margins of HeidelbergCement India jumped 18 percent in the fourth quarter (Q4) of FY16 compared to 16.5 percent in the same period last year. Lower pricing on the revenue front and improved operating efficiencies helped the company post good results in the Q4 of FY16, said Jamshed Naval Cooper, CEO & MD of HeidelbergCement India. The company paid a debt of Rs 275 crore in Q4 and aims to repay Rs 215 crore more by September 2016, post which it will be left with Rs 600 crore, he added. The month of May has seen good demands, and Cooper hopes June to be better in terms of volume growth. The EBITDA margins for Q4FY16 were 18.5 percent and with improved efficiencies the company should sustain them in the long run, he said. He expects the cement industry to grow at around 6-7 percent in FY17. Below is the verbatim transcript of Jamshed Naval Cooper’s interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18. Latha: If you can take us through how the volumes and realisations panned out in the fourth quarter as well how have they done in the first two months of this quarter now that we are almost through with May? A: For the fourth quarter the volume has been up by about 2 percent. The costs have been lower by about 3.9 percent. On the revenue side it has been low because of the lower prices. However, in terms of our operating efficiencies we have improved and that is how we get a better result this year. Plus we have paid our long-term debt about Rs 275 crore which was to be paid in the last quarter of this financial year. You asked about the current quarter, the markets have been very choppy in terms of the markets in month of April they were somewhat lower then again in the month of May they have shown us some improvement. So, it has been a swing all the time. Hopefully the market should stabilise after the monsoons. Hope for a good monsoon is important this year. Latha: Were this two months better in terms of volumes? You said 2 percent in the January-March quarter. Would April-May have been better? A: Can’t say that because the whole month has to go right now. We don’t know how the monsoons pan, we will see. Latha: Nevertheless if you were to compare with year ago May and year ago April is it indicating that what we call proverbial green shoots are really there in terms of cement demand? A: The month of May has seen better demand this year, so hopefully we expect that June should be good equally. Reema: What about on your margins they have gone up by 250 basis points do you think that the EBITDA margins at 18.50 percent are sustainable because we do understand that coke prices have gone up? A: We have been using petroleum coke, we have been improving efficiencies. So, on a consumption parameters we are better. That is how the EBITDA margins have been improving and I think we can sustain it in the long run.