Supreme Petrochem Q1 Revenue Dips 12% to Rs 1,386 Crores Amid Lower Styrene Prices
Supreme Petrochem Ltd experienced a 12% year-on-year decrease in Q1 operating income, reaching Rs 1,386.00 crores. Operating EBITDA fell 29% to Rs 115.00 crores, with EBITDA margin at 9.36%. Net profit after tax was Rs 81.00 crores. Despite challenges, sales volume of manufactured products increased slightly by 0.5% to 93,853 MT. The company progressed on strategic fronts, including the ABS project and Xmold Polymers acquisition. Supreme Petrochem remains debt-free with over Rs 700.00 crores in investable surplus. The company aims to increase export revenue to 13-14% and expects positive contributions from the ABS project in future quarters.
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Supreme Petrochem Ltd , a leading petrochemical company, reported a 12% year-on-year decline in operating income for the first quarter, primarily due to lower styrene monomer prices and subdued demand in key sectors.
Financial Performance
The company's operating income for Q1 stood at Rs 1,386.00 crores, down from the previous year's corresponding quarter. This decline was largely attributed to the fall in styrene monomer prices, which dropped from $1,150.00 to $1,000.00 per ton during the period.
Operating EBITDA saw a more significant decrease of 29% year-on-year, reaching Rs 115.00 crores. The EBITDA margin contracted to 9.36% for the quarter. Net profit after tax was reported at Rs 81.00 crores.
Operational Highlights
Despite challenging market conditions, Supreme Petrochem managed to increase its sales volume of manufactured products marginally by 0.5% year-on-year, reaching 93,853 MT in Q1.
Rakesh Nayyar, Executive Director and CFO of Supreme Petrochem, explained, "Unseasonal rains and a milder summer led to subdued domestic demand for cooling appliances such as air conditioners and refrigerators. Additionally, styrene monomer prices were lower in Q1 compared to the same quarter in the previous year, which impacted revenue despite a marginal increase in the volume of manufactured products sold."
Strategic Developments
The company reported progress on several strategic fronts:
ABS Project: Pre-commissioning activities for the first phase of the ABS (Acrylonitrile Butadiene Styrene) project are ongoing with support from technical collaborators, M/S Versalis. Commercial operations are expected to commence in the current quarter.
Xmold Polymers Acquisition: The acquisition of Xmold Polymers was completed during the quarter, with integration of operations and processes currently underway.
Financial Position: Supreme Petrochem continues to maintain a debt-free status, with an investable surplus exceeding Rs 700.00 crores as of June.
Export Outlook
The company is targeting to increase its revenue from exports to 13-14%, up from about 9% in the previous fiscal year. This strategic move aims to diversify the company's market presence and mitigate risks associated with domestic market fluctuations.
Future Prospects
Looking ahead, Supreme Petrochem remains optimistic about its growth trajectory. The company expects the ABS project to contribute positively to its financial performance in the coming quarters, albeit with an initial period of stabilization and market acceptance.
Mr. Nayyar commented on the ABS project, stating, "We are confident that we will certainly make some money out of it. Though it will be our first six months of operations and at lower capacity, with new product acceptability issues, we still expect to earn some contribution from that business."
The company also plans to focus on both the ABS expansion and the development of its Haryana plant to cater to the North Indian market.
As Supreme Petrochem navigates through the challenges posed by market dynamics and global economic conditions, its strategic initiatives and strong financial position are expected to support its growth and market presence in the petrochemical industry.
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