Ultratech Cement Q1 net dips 42%
Ultratech Cement, an Aditya Birla Group firm, has recorded a 42% decline in quarterly net profit due to a sharp drop in cement prices.
By ET Bureau |
MUMBAI: Ultratech Cement, an Aditya Birla Group firm, has recorded a 42% decline in quarterly net profit due to a sharp drop in cement prices and rise in raw material costs. The company’s net profit in the June quarter has contracted to Rs 243 crore from Rs 417 crore in the year-ago period.
Net sales, during the period, dropped by 8.4% to Rs 1,790 crore as cement prices softened by over 20% in the southern markets, which account for three-fourth sales of the company. UltraTech expects pressure on prices and margins to continue in the short term, but said cement demand is likely to grow 10% through the year.
“Significant capacity additions have resulted in a surplus scenario, which will continue in the current year, raising concerns over additional capacity and margins,” said the group chairman Kumar Mangalam Birla. “It will lead to a surplus scenario over the next 18 to 24 months. This
may impact cement prices to some extent.”
However, the global economy indicates visible signs of recovery, he told the shareholders at the company’s 10th annual general meeting in Mumbai. “The severe slowdown of 2008-09 is behind us and in India, we are much better positioned. With GDP slated to grow over 8.5%, the economy is on a firm growth trajectory,” he added. UltraTech’s power and fuel costs increased by 7.8% to
`417 crore whereas freight expenses went up by 17% to `358 crore. The scrip closed 1.94% up at `872.95 in a flat Mumbai market on Thursday.
“The result is in line with expectations,” said Rupesh Sankhe, an analyst at Angel Securities.
OP Puranmalka, head-cement business, Ultratech said the company will invest `2,000 crore over next five years, which will be funded through a combination of internal accruals and borrowings. It’s debt-equity ratio stands at 0.35, he added.
India’s 270 million tonne cement market, the world’s second-largest, has been driven by demand from infrastructure. India is likely to spend $1 trillion to build power plants and roads to boost growth in Asia’s third-largest economy in the five years ended 2017.
UltraTech is likely to merge a group firm, Samruddhi Cement, in August with itself which will establish it as the country’s biggest cement maker with 49 million tonne capacity.
Net sales, during the period, dropped by 8.4% to Rs 1,790 crore as cement prices softened by over 20% in the southern markets, which account for three-fourth sales of the company. UltraTech expects pressure on prices and margins to continue in the short term, but said cement demand is likely to grow 10% through the year.
“Significant capacity additions have resulted in a surplus scenario, which will continue in the current year, raising concerns over additional capacity and margins,” said the group chairman Kumar Mangalam Birla. “It will lead to a surplus scenario over the next 18 to 24 months. This
may impact cement prices to some extent.”
However, the global economy indicates visible signs of recovery, he told the shareholders at the company’s 10th annual general meeting in Mumbai. “The severe slowdown of 2008-09 is behind us and in India, we are much better positioned. With GDP slated to grow over 8.5%, the economy is on a firm growth trajectory,” he added. UltraTech’s power and fuel costs increased by 7.8% to
`417 crore whereas freight expenses went up by 17% to `358 crore. The scrip closed 1.94% up at `872.95 in a flat Mumbai market on Thursday.
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“The result is in line with expectations,” said Rupesh Sankhe, an analyst at Angel Securities.
OP Puranmalka, head-cement business, Ultratech said the company will invest `2,000 crore over next five years, which will be funded through a combination of internal accruals and borrowings. It’s debt-equity ratio stands at 0.35, he added.
India’s 270 million tonne cement market, the world’s second-largest, has been driven by demand from infrastructure. India is likely to spend $1 trillion to build power plants and roads to boost growth in Asia’s third-largest economy in the five years ended 2017.
UltraTech is likely to merge a group firm, Samruddhi Cement, in August with itself which will establish it as the country’s biggest cement maker with 49 million tonne capacity.
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