Ambuja Cements Q1 net profit down 37% as sales volume slips

Ambuja Cements' consolidated net profit fell more than a third in the fiscal first quarter, squeezed by a 7% drop in sales volume and higher costs. However, the Adani Group company said going forward, it will sharpen focus on value over volumes.

Ambuja is the only major cement producer to report quarterly sales volume decline so far. UltraTech Cement, Nuvoco Vistas Corp and Dalmia Bharat clocked 5-13% year-on-year volume growth in the same period.

"Our priority is no longer simply adding capacity, but it is converting scale into high productivity, superior profitability, and stronger returns on capital," said Vinod Bahety, chief executive, on a call to discuss the earnings.


Consolidated net profit slipped 37% year-on-year to ₹660 crore while consolidated revenue from operations fell 8% to ₹9,500 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) declined 19% to ₹1,589 crore during the period.

"Our strategy remains clear and consistent, creating sustainable value ahead of volume," said Bahety. The company, though, remained confident of outpacing industry growth through the remainder of this fiscal.

While cement demand remained stable last quarter, industry profitability got impacted by higher imported fuel prices, elevated trade costs, and geopolitical tensions in West Asia, he said.

"We used this as an opportunity to perform scheduled maintenance for almost 12% of our kilns, absorbing additional costs of ₹50 per metric tonne this quarter, while we built up clinker inventory of one month and coal inventory of around three months, giving us a competitive edge in the second quarter," he said.

The September quarter is seasonally the weakest for cement companies as demand slows down amid sluggish construction activity due to monsoons.