Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Century Enka Ltd (BOM:500280, Financial) reported a significant year-on-year growth in operating revenues by 35% for Q2 FY25.
- EBITDA for the quarter increased by 300% year-on-year, indicating strong operational performance.
- Profit after tax rose by 400% year-on-year, reflecting improved profitability.
- The company experienced higher capacity utilization due to improved demand conditions in the filament segment.
- Efforts to produce more value-added products have helped mitigate the impact of Chinese imports, leading to improved margins.
Negative Points
- Margins remain under pressure due to raw material price volatility and imports from China.
- There is expected moderation in demand for the truck and bus segments, which could impact future performance.
- The company anticipates some pressure on margins in Q3 due to the fall in raw material prices and higher inventory costs.
- Imports are expected to increase, potentially affecting domestic sales and market share.
- The company faces challenges in maintaining competitiveness against Chinese imports, despite efforts to rationalize costs.
Q & A Highlights
Q: How is the trial run of the polyester tire cord fabric progressing, and what is the response to the approval process?
A: The approval process for polyester tire cord, used in passenger vehicles, is lengthy. We have started production and provided samples to tire companies. After initial lab testing, field trials will follow. We expect early approval for bulk trials by the end of this financial year or early next financial year. (CFO)
Q: How are raw material prices, particularly caprolactam, affecting the company?
A: Caprolactam prices have ranged between $1,680 and $1,600 throughout the quarter. However, due to oil price volatility, prices have significantly decreased and are currently around $1,500. (CFO)
Q: What is the outlook for sustaining revenue growth and margins, considering the current performance of tire companies?
A: We expect some moderation in Q3 due to increased imports following eased supply chain constraints. However, demand in the farm segment and potential infrastructure spending should help. We anticipate a similar situation to the first two quarters towards the end of Q3. (CFO)
Q: Can you provide an update on the company's cost optimization efforts?
A: Major costs include power and manpower. We are implementing a hybrid power project at our Baruch unit to reduce power costs and are optimizing manpower by not replacing retiring staff. The hybrid power project is expected to save approximately ₹4 per unit, sourcing 30% of our power needs. (CFO)
Q: What is the current status of the supply chain, particularly container availability and freight rates?
A: The supply chain has largely normalized, with container freight rates returning to pre-disruption levels. There are still some delays due to past congestion, but overall, the situation has improved significantly. (CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
