The Hindu Business Line : Engineering and construction margins boost L&T net 33%

Mumbai, July 28 Larsen & Toubro has posted a 33 per cent rise in net profit for the first quarter of the fiscal as revenues rose and margins from its key engineering and construction (E&C) business looked up.

Gross sales rose by 53 per cent. The E&C segment, which accounts for more than two-thirds of the company’s revenues, reported an operating profit margin of 10.5 per cent from 9.6 per cent a year ago, almost a whole percentage point higher.

Margins were fortified through better contract management and continuous cost optimisation in executing large turnkey projects, a company statement said.

Operationally the quarterly results are better than the net profit increase suggests: The company had made foreign exchange gains during the year-ago quarter, which, if excluded, would have meant a net profit increase of 70 per cent, the statement said.

Margins were higher across all business segments, barring the Electrical and Electronics segment, which was affected by both input cost increases and lower sales volumes where sales were up only 7 per cent while margins declined.

E&C sales rise

E&C sales were 59 per cent higher, at Rs 5,545 crore while profit before interest and tax was 80 per cent higher at Rs 537 crore (Rs 297 crore).

The machinery and industrial products segment reported a 50 per cent increase in gross sales, at Rs 633 crore. The segmental profit before interest and tax was 64 per cent higher, at Rs 146 crore (Rs 89 crore).

Order inflows

Overall, order inflows rose 24 per cent year-on-year, the E&C segment reporting orders at 28 per cent higher, at Rs 10,516 crore. International orders constituted 13 per cent of order of E&C inflows during the quarter.

The E&C order book position itself stood at Rs 56,336 crore.

The order position provides healthy sales growth visibility over the next one or two years, said the company. It also expects order inflows to continue in view of the importance of sustaining investments in sectors like infrastructure, power and hydrocarbons.

The company’s stock rose 3.73 per cent from its previous close, ending the trading day at Rs 2,723.55.