Chemplast Sanmar Limited., an Indian chemicals manufacturer announced its results for the second quarter ended Sept 30, 2022.
Q2 Results- QoQ
The company’s net profit dropped 5.1% to Rs 385.4 million for the period ended Sept 30, 2022 as against net profit of Rs 405.9 million for the previous quarter.
Net sales decreased 15.1% to Rs 12.11 billion during the period ended Sept 30, 2022 as compared to Rs 14.27 billion during the previous quarter.
Q2 Results- YoY
The company reported 74.5% drop in net profit to Rs 385.4 million for the period ended Sept 30, 2022 as against net profit of Rs 1.51 billion for the prior-year quarter.
Net sales declined 28.5% to Rs 12.11 billion during the period ended Sept 30, 2022 as compared to Rs 16.94 billion during the prior-year quarter.
Commenting on the financial results, Ramkumar Shankar, Managing Director, Chemplast Sanmar Ltd 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,” Shankar commented.
“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,“ he added.
H1 Results- YoY
The company reported 56.1% drop in net profit to Rs 791.3 million for the period ended Sept 30, 2022 as against net profit of Rs 1.8 billion for the prior-year 1st half period.
Net sales decreased 1.2% to Rs 26.38 billion during the period ended Sept 30, 2022 as compared to Rs 26.69 billion during the the 6 Months period last year.
Chemplast Sanmar Limited is a leading player in the Indian chemical industry engaged in the manufacture and sale of specialty chemicals and polymers like PVC.