Tata Chemicals Magadi (TCML) revenue was down 4% to $73.8 million on account of a 15% decline in volume, partly offset by a 13% improvement in realisation.
We pored over Tata Chemicals’ (TTCH) FY19 annual report to analyse its performance across key product categories and geographies. Among the various geographies where TTCH operates its soda ash business, only India delivered revenue growth (+16%) in FY19, driven by a realisation improvement. Tata Chemicals North America (TCNA) revenue declined 4% to $476 million in FY19 owing to a 5% drop in volumes due to production breakdown, partly offset by a 1% improvement in realisation. UK operations turnover was down 6% to £158 million in the year due to a decline in soda ash and sodium bicarbonate volumes by 18% and 5%, respectively, partly offset by an 11% improvement in blended realisation. Lower volumes can be attributed to the planned reduction in sales of low-margin imported soda ash.
Tata Chemicals Magadi (TCML) revenue was down 4% to $73.8 million on account of a 15% decline in volume, partly offset by a 13% improvement in realisation. But in rupee terms, the firm exhibited revenue growth across these regions due to appreciation in the dollar and the pound by 9% and 7%, respectively. Consolidate Ebitda margin shrank 280 bps to 18.5% in FY19, mainly on account of the weak performance across foreign operations and a 210 bps contraction in the standalone Ebitda margin to 24.5%. However, we note that the contraction in the standalone margin appears optically higher owing to the regrouping of freight and forwarding charges. Adjusting for the same, the margin contraction stands at 100 bps.
TCNA’s Ebitda fell 8% to $98 million, mainly on account of higher energy prices and maintenance cost. But in rupee terms, Ebitda dropped by a mere 1%. UK operations’ Ebitda fell 43% to £15 million; Ebitda/MT was down 33% y-o-y to £33.6/MT, despite an 11% improvement in realisation. Additionally, we note Ebitda/MT was on a downtrend from Q4FY18 to Q3FY19, but bottomed out thereafter and doubled to £28.3/MT in Q4FY19 (Ebitda/MT includes soda ash, bicarb, salt and power, whereas volume includes soda ash and bicarb). TCML’s Ebitda fell 25% to $10 million due to lower sales volume, higher fixed costs and increased rail haulage charges. However, in ` terms, Ebitda was down by a lesser 19%.