UltraTech Cement, an Aditya Birla Group company, has reported that its net profit more than doubled mainly due to the lower base effect. The company's cement sales were up two per cent at 8.94 million tonnes (8.76 mt).
Though the company's performance looks better when compared year-on-year, its net profit has plunged 59 per cent compared to Rs 683 crore registered in the June quarter, while sales were down 11 per cent on a sequential basis. The production in the quarter under review was down five per cent when compared to the June quarter output of 9.46 mt.
“Although year-on-year performance indicates an improvement on account of a lower base effect, on a sequential basis the company's performance was subdued, given the lesser demand, lower realisation and substantial increase in costs,” the company said in a press release on Thursday.
Raw material cost increased 15 per cent to Rs 542 crore compared with Rs 472 crore registered in the same period last year, power and fuel expenses rose 13 per cent to Rs 955 crore (Rs 843 crore), while freight cost was up 15 per cent to Rs 748 crore (Rs 650 crore).
Mr Ravindra Deshpande, Research Analyst, Elara Securities, said recent price hikes notwithstanding, cement demand continue to remain weak with all-India cement sales rising just two per cent in the first half of this fiscal.
“Given last year's higher base and upcoming festival season, the industry is expected to report a fall in dispatch growth in October as well,” he added.
The 30 per cent increase in the domestic coal price and sustained rise in imported coal together with escalation in freight costs due to the diesel price hike have constrained the company's performance, said UltraTech Cement. Besides, jump in input and energy costs also impacted the company's financials, it added.
“The surplus supply scenario is likely to continue over the next two to three years. At the same time, growing input costs will squeeze margins,” said the release.
The company's shares on BSE were down one per cent at Rs 1,111 on Thursday.