Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Century Plyboards (India) Ltd (BOM:532548, Financial) achieved its highest-ever quarterly top line, with stand-alone revenue increasing by 10.6% and consolidated revenue by 18.7% year-on-year.
- The plywood division reported a significant year-on-year growth of 21.1% with improved EBITDA margins of 15%, despite rising raw material costs.
- The newly established MDF facility in Andhra Pradesh showed remarkable progress, contributing to a 75% year-on-year volume growth in the MDF segment.
- The company anticipates the Andhra Pradesh MDF facility to become EBITDA positive by Q3, with expectations of over 40% value growth.
- Century Plyboards is expanding its PVC board facility in Andhra Pradesh, expected to contribute nearly INR100 crores in revenue over time.
Negative Points
- The Laminate division experienced a year-on-year decline, with EBITDA margins reducing to 7% due to higher marketing expenses.
- Intense competition in the particle board segment continues to pressure average realization and raw material costs.
- The Andhra Pradesh MDF unit faced a 20% lower realization compared to stand-alone operations, impacting profitability.
- The company experienced a ForEx loss, impacting operating metrics, with a consolidated ForEx loss of approximately INR13 crores.
- The laminate segment's stand-alone sales volume was down by 10% year-on-year, with challenges in ramping up the new unit.
Q & A Highlights
Q: What is the reason for the operating loss increase in the Andhra Pradesh MDF unit despite improved realizations?
A: Keshav Bhajanka, Executive Director, explained that the Andhra unit had just started ramping up value-added products, which affected average realizations. Additionally, a ForEx loss was included in the operating metrics, which, if excluded, shows a reduced loss. The unit is expected to be EBITDA positive in the next quarter.
Q: Why did the laminate segment see a decline in sales volume and realizations?
A: Keshav Bhajanka noted that the decline was due to weakness in both domestic and export sales. The company is taking steps to recover, including new product launches and expanding the sales and marketing team. The realization drop was attributed to an adverse product mix, but price increases are being implemented.
Q: How is the company addressing the margin pressure in the particle board segment?
A: Keshav Bhajanka stated that the pressure is due to intense competition and higher timber costs. The company is setting up a new facility to improve quality and reduce costs, expected to start operations by the end of the fiscal year. Margins are expected to improve post-commissioning.
Q: What is the guidance for EBITDA margins for MDF and laminate segments in H2 FY25?
A: Keshav Bhajanka clarified that the EBITDA margin guidance is for a stand-alone basis, with MDF margins expected to be 10%-plus on a consolidated basis. The sales growth numbers are on a consolidated basis.
Q: How is the company planning to maintain its market position in the MDF segment amid new capacity additions?
A: Sumant Wattas, CEO of MDF, stated that while there is currently an oversupply, demand remains robust. The company is confident in maintaining its position through investments in high value-added products and expects demand to catch up with supply over the next 12 to 15 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
