Carborundum Universal Q1 net sales up 32%

Overseas subsidiaries recorded strong growth in sales, particularly the entities in Russia and South Africa.

The Board of Directors of Carborundum Universal Limited (CUMI), a part of USD 3.8 billion Murugappa Group, approved the results for the quarter ended 30th June 2011.

Consolidated Q 1 financial performance

Consolidated net sales grew up by 32% to Rs.4.65bn from Rs.3.52bn. PBIT (excluding exceptional income) grew up by 73% from Rs.500mn to Rs.870mn. Growth was driven by the strong performance of both the Indian and Overseas operations. All business segments recorded growth rates in excess of 25%. Profitability of all business segments as well witnessed a good increase.  Overseas subsidiaries recorded strong growth in sales, particularly the entities in Russia and South Africa.


Earnings before interest, depreciation and amortisation (EBITDA) recorded an increase of 65% (i.e. from Rs.600mn to Rs.1bn) without considering exceptional income of last year.

Profit before tax and exceptional income was Rs.800mn - an increase of 86% over the previous year amount of Rs.43 crores. However, the profit after tax represents only an increase of 20% (i.e. Rs.52 crores compared to Rs.43 crores last year) because of the impact of the exceptional income of Rs.23 crores in the previous year.

Consolidated Operating Performance

Abrasives

CUMI’s abrasives sales on a consolidated basis registered an increase of 34%. Sales for the quarter was Rs.198 crores (Rs.148 crores for the corresponding period of last year). This growth was made possible by the continued strong off-take from user industries in India and Russia.

In India the order inflow for non-standard bonded abrasives, both from direct customers and from the trade channel was buoyant. Coated abrasive products also registered strong growth in sales compared to last year, primarily driven by the sheets and rolls segments. The manufacturing team performed creditably to support the surge in sales. The business was able to improve margins due to product mix and price increases. The operations in China, Middle East and Canada continued to be subdued though there were some improvements in the US operations. CUMI’s subsidiary and joint venture in Indian abrasive segment, registered growth rates in excess of 25% aided by the buoyancy in the manufacturing sector. Profit before interest and tax on a consolidated basis recorded an increase of 88% i.e. from Rs.17 crores to Rs.32 crores.

Electro Minerals

The second largest business segment viz. Electro Minerals continued to ride the growth wave with a robust increase of 33% in sales (Rs.176 crores vs. Rs.133 crores). The growth in sales was made possible by the robust performance of the Indian, Russian and South African operations. In Russia, sales growth was aided by higher price realisations. The Indian operations recorded good growth in both domestic and export sales. Captive sales also showed an improvement. All product segments registered good growth. The South African operations witnessed a revival in fortunes with profits showing a marked increase.

 Strong growth in revenues and also good improvement in operating margins enabled the increase in profit before interest and tax of the electro minerals business on a consolidated basis by 72% i.e. from Rs.21 Crores to Rs.36 Crores.