Specialty chemical firm Chemplast Sanmar announced Q3FY23 results: Q3FY23: Prices for both Paste PVC and Suspension PVC bottomed out during the quarter, after continuous fall from April ‘22. Trend reversed from December 2022 onwards with multiple price increases for both Suspension PVC and Paste PVC Feedstock (EDC and VCM) prices continued to move in line with PVC prices, albeit with a lag. We expect margins to improve in Q4FY23 Volumes across the portfolio saw an uptrend in Q3FY23 as compared to the corresponding period last year The Custom Manufacturing business continues to achieve strong growth Power & fuel cost increased by Rs 170 crore and by Rs 37 crore as compared to 9M and Q3FY22, respectively - mainly due to increase in coal, natural gas & superior kerosene prices Both the Paste PVC and Custom Manufacturing expansion projects are on track Plan to kick-start the next phase of expansion of Custom Manufacturing multi-purpose facility. The total capex outlay (including the next phase) will be ~ Rs 680 crore to be spent over the next 15 months. With a healthy cash balance of Rs 1,167 crore, the company continues to be net cash positive on a consolidated basis. Commenting on the results, Mr. Ramkumar Shankar, Managing Director, said, “In an evolving macro environment, as expected, the quarter gone by has turned out to be another subdued one for us as well as the industry. Our business continued to face headwinds for most part of Q3FY23 with a revival in PVC prices only from December onwards. For the 9MFY23 period, revenues were lower by 7% as compared to the corresponding period last year – however, sales volumes of all products were higher on a YoY basis. Falling prices of finished goods coupled with increase in energy costs have resulted in reduction of EBITDA margin which stood at ~10% for the 9MFY23 period The situation for the PVC segment is turning favorable again, driven by robust domestic demand and China re-opening. PVC prices have started moving upwards after nine months of falling prices, channel inventory has dried up and volume off-take is back to normal. We expect the demand in FY23 for Suspension PVC in India to touch the pre-pandemic levels of 3.3 million tonnes, a 16%-17% growth over FY22. Overall, with recovery in PVC prices and healthy demand trends, we expect our Q4FY23 performance to return to a growth trajectory High energy costs continue to remain a concern, though here too, there are some encouraging signs with a reduction seen in coal prices. In the Custom Manufacturing segment, we will continue to achieve strong growth going forward. We recently received confirmation from one of our customers that we have been selected to supply an advanced intermediate for an already established generic AI. Based on this development, along with the announcement in the previous quarter on the signing of an LOI for another intermediate, and a healthy pipeline of products, we plan to kick-start the next phase of expansion of the multi-purpose facility immediately. While Phase 1 is expected to come on-stream by Q2FY24 as originally scheduled, we are targeting to commission the next phase by end of FY24 The Other Chemicals businesses complete our integration story and outlook for this segment remains stable over the medium term, though there are some short-term challenges. Both our capex projects are on track and slated to meet expected timelines. We expect a better performance in FY24 driven by a combination of a rebound in PVC demand & prices along with new capacities (Paste PVC and Custom Manufacturing) coming on-stream during the year.” Result PDF
Specialty chemical company Chemplast Sanmar announced Q2FY23 results: Q2FY23 & H1FY23: Feedstock (EDC and VCM) prices have also dropped, albeit with a lag. The benefit will however be realized only once the PVC prices stabilize; expect these to stabilise by the end of Q3 Volumes are back to normal - Volumes of all products witnessed an increase in H1FY23 compared to the volumes in the corresponding period last year Custom Manufacturing business continued to see healthy demand in Q2FY23 In Q2FY23, Other Chemicals delivered a 37% increase in revenues on a YoY basis, primarily led by growth in terms of both volumes and prices of Caustic The cost of Power and Fuel increased by Rs 132 crore and Rs 61 crore compared to H1 and Q2 of FY22, respectively. This is mainly attributed to increasing in coal and natural gas prices In H1FY23, the company spent Rs 115 crore for capex. Both the Paste PVC and Custom Manufacturing expansion projects are on track With a healthy cash balance of Rs 1,400 crore, the company continues to be net cash positive on a consolidated basis Commenting on the results, Mr. Ramkumar Shankar, Managing Director, said, “The unique situation that the PVC industry is experiencing continued through this quarter. Our business continued to face headwinds in Q2 FY’23 as well due to the zero-COVID policies in China, rising energy costs due to the Russia-Ukraine war and overall inflationary pressures. Chinese shutdowns related to zero-COVID policies led to inventory build up in China and continuous dumping into India, though some reduction has been witnessed in the last couple of months. With our strong balance sheet and portfolio of products, we have been able to fare reasonably well in this extremely tough situation. We closed the first half of the fiscal with a flat top-line and a double digit EBITDA margin of 11%. Falling prices of finished goods coupled with increase in energy costs have resulted in reduction of margins. We believe that both Paste PVC and Suspension PVC prices are nearing the bottom and with lower feedstock price, we expect to see an upturn from Q4-FY’23 onwards. Based on current trends, Custom Manufacturing business is expected to grow at ~30% in FY'23. Recently, we have signed a Letter of Intent with a global innovator to supply an advanced intermediate for a recently launched active ingredient. To cater to the additional volumes of Custom Manufacturing business, we plan to increase the capacity in Phase 1 itself and fast track the expansion. We expect to achieve significant growth in this segment in the coming years. Caustic Soda prices continue to remain healthy. Demand for Chloromethanes is also steady. There have been a few capacity additions recently which could have a temporary impact on prices. However, we expect the prices to recover once the market absorbs the additional quantities. Hydrogen peroxide demand increased on the back of improved demand from paper industry; the outlook remains positive with rising prices due to the tightness in the natural gas availability impacting supply in the region. Energy costs continue to remain high, with coal and natural gas prices on an upward trend. Both our capex projects are on track and slated to meet expected timelines.” Result PDF