Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carborundum Universal Ltd (BOM:513375, Financial) achieved its highest quarterly sales in Q2 FY25, with consolidated sales reaching INR1,209 crores, marking a 7.6% growth compared to Q2 FY24.
- Profit before interest and tax (PBIT) for Q2 FY25 grew by 9.2% over Q2 FY24, indicating improved operational efficiency.
- The company's Electro Minerals segment showed a significant quarterly growth of 9.2% in Q2 FY25, driven by volume increases and higher price realizations.
- The Ceramics segment saw a PBIT growth of 23% in Q2 FY25 compared to Q1 FY25, supported by double-digit growth in stand-alone Australia and BAW Russia.
- Carborundum Universal Ltd completed the acquisition of a 100% stake in Silicon Carbide Products, aligning with strategic expansion plans and offering synergies in market access and technology capabilities.
Negative Points
- The Electro Minerals segment experienced a decline in consolidated PBIT margins from 17% to 12.9% on an H1 basis, primarily due to pricing pressures in the market.
- AWUKO's performance was below expectations, with sales growth limited to EUR2 million against the anticipated EUR8 million to EUR10 million, impacting overall profitability.
- Foskor Zirconia incurred a loss of INR14.7 crores in H1 FY25, compared to a loss of INR6.1 crores in H1 FY24, due to pricing pressure and currency fluctuations.
- The consolidated PBIT margin for H1 FY25 decreased slightly from 12.8% in H1 FY24 to 12.7%, reflecting challenges in maintaining profitability across segments.
- The company's return on capital employed (ROCE) at a consolidated level decreased from 19% in H1 FY24 to 17% in H1 FY25, indicating a decline in capital efficiency.
Q & A Highlights
Q: Can you provide more details on the growth drivers for the Ceramics and Refractory segments, and how is the demand from sectors like carbon black and steel?
A: The growth in ceramics and refractories is driven by robust demand across sectors such as cement, carbon black, and chemical industries. The trajectory for recovery with a major customer is on track, and we expect continued growth in these segments. (Sridharan Rangarajan, Managing Director)
Q: How is the competition from Chinese companies affecting the Electro Minerals and Abrasives segments?
A: Chinese competition remains intense, particularly in the Electro Minerals segment, affecting sales and margins. In India, we have managed to pass on cost increases to the market, but the situation remains unpredictable. We are cautiously working with customers to manage cost pressures. (Sridharan Rangarajan, Managing Director)
Q: What is the reason for the weak performance of Kemi America and Sterling Abrasives in the second quarter?
A: Kemi America's performance was impacted by a major customer relocating operations, leading to a temporary decline. Sterling Abrasives faced challenges due to policy changes affecting product demand. We expect recovery as these issues are addressed. (Sridharan Rangarajan, Managing Director)
Q: Could you elaborate on the CapEx guidance reduction from INR350 crores to INR300 crores?
A: The reduction is due to timing differences and delays in starting some projects. All planned CapEx will proceed, and the reduction is not indicative of structural changes. (Sridharan Rangarajan, Managing Director)
Q: How are exports performing, and which segments and geographies are driving this growth?
A: Exports have performed well, particularly in Electro Minerals and Ceramics, with Europe and America being key markets. Abrasives faced some challenges, but overall export growth remains strong. (Sridharan Rangarajan, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
