Conference Call with Chemplast Sanmar Management and Analysts on Q2FY24 Performance and Outlook. Listen to the full earnings transcript.
Specialty Chemicals company Chemplast Sanmar announced Q2FY24 results: Financial Performance: - Revenue from Operations for Q2FY24 amounted to Rs 988 crore, a decrease of 17% YoY. - EBITDA for Q2FY24 was Rs 46 crore, with an EBITDA margin of 5%. - PAT for Q2FY24 was Rs 26 crore, with a PAT margin of 3%. Pricing and Demand: - Prices of both Suspension and Paste PVC were marginally higher in Q2FY24 on a QoQ basis. Prices were 2.5% to 5% higher sequentially. - Caustic Soda and Chloromethanes prices witnessed further correction in Q2FY24 compared to Q1FY24. - Imports of both Suspension and Paste PVC saw an increasing trend towards the end of Q2, resulting in some correction in prices in October. - Demand for PVC products remains strong, especially in the infrastructure and real estate sectors. Other Chemicals Business: - The Other Chemicals business (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Refrigerant gases) experienced pricing pressures due to weak demand and excess supply in the Indian market. - Some signs of price recovery were observed towards the end of October. Projects Update: - CMC Phase 1 was commissioned by the end of September 2023 and is being ramped up. - CMC Phase 2 is on track for completion by the end of FY24. - The paste PVC project is on track for commissioning in Q3FY24. Commenting on the results, Ramkumar Shankar, Managing Director, said, “Following a tepid Q1FY24, Q2FY24 witnessed a relatively better performance mainly due to improvement in prices of both Suspension and Paste PVC coupled with lower feedstock prices. The top line was flat while EBITDA was back in the black during the quarter. However, the imports of both Suspension and Paste PVC witnessed an increasing trend towards the end of Q2 with heavy arrivals from China. This trend has spilled over to Q3 as well, resulting in some correction in prices in October. We expect the PVC margins to be under pressure in Q3. The demand outlook for our PVC products, however, remains strong with a boom in the infrastructure and real estate sectors. We expect the recovery in prices and margins to be gradual over the next 2-3 quarters. The Other Chemicals (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Refrigerant gases) business continued to witness pricing pressures during the quarter due to weak demand, excess supply situation in India due to recent capacity additions, and the global slowdown. There are some initial signs of recovery in prices towards the end of October. The inquiries for our Custom Manufactured Chemicals Division’s business continue to remain robust. To effectively address the growing demand, we continue to enhance our capabilities. With the recent signing of the third LOI with a global agrochemical innovator for an Active Ingredient, we have strong visibility with respect to steady-state capacity utilization of the new production block and are on track to achieve Rs 1000 crore revenues in the next 3-4 years While we face headwinds in the near term, the business prospects for our products continue to be strong in the medium to long term. With the projects on track for commissioning as per the slated timelines, we are confident of delivering a healthy performance in the future.” Result PDF
Specialty chemicals company Chemplast Sanmar announced Q1FY24 results: Revenue from operations of Rs 996 crore in Q1FY24 compared to Rs 1,411 crore in Q1FY23, down 29% YoY EBITDA of Rs (35) crore in Q1FY24 compared to Rs 194 crore in Q1FY23 EBITDA margin % of -3% in Q1FY24 compared to 14% in Q1FY23 PAT of Rs (64) crore in Q1FY24 compared to Rs 41 crore in Q1FY23 PAT margin % of -6% in Q1FY24 compared to 3% in Q1FY23 Commenting on the results, Ramkumar Shankar, Managing Director, said, “With prices of both Suspension and Speciality Paste PVC being at the lowest level over the last 8-10 quarters, Q1FY24 has been one of the toughest quarters in recent times for Chemplast and the PVC industry as a whole. This is mainly due to the sluggishness in demand globally and the excessive dumping from China. However, the domestic demand for Suspension PVC and Speciality Paste PVC was strong through the quarter with an increase in volumes both on YoY and sequential basis. The outlook for the PVC business is improving again, driven by the strong domestic demand, recovery in prices on account of a fall in import arrivals into the country, and reduction in feedstock prices. These factors, coupled with the softening energy costs, augur well for us and we expect better margins from Q2FY24 onwards. The Other Chemicals (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Ref. gases) business also witnessed significant pricing pressures due to a combination of factors including weak demand, excess supply situation in India due to recent capacity additions, and the global slowdown. These headwinds are likely to continue for a couple of quarters. In this tough environment, our Custom Manufactured Chemicals Division continued to perform well and is on track to achieve over 25% revenue growth during the year as against the 10%- 15% guidance given earlier. I am very pleased to inform you that we have completed Phase 1 of the new multi-purpose block promptly with an investment of around Rs 300 crore. With 2 LOIs in place and a strong pipeline of other products, we expect this capacity to reach peak utilization in the next 2-3 years. The 41 ktpa Speciality Paste PVC and Phase 2 of the Custom Manufacturing expansion projects are on track and slated to meet expected timelines. While there are immediate-term challenges, we are very confident of all our businesses’ prospects in the medium to long term.” Result PDF