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UltraTech Cement Limited, the largest cement manufacturer in India, on October 19 reported a 42 percent decline in its consolidated net profit at Rs 759 crore for the quarter ended September 30, 2022 from Rs 1,310 crore in the year-ago period.
On a sequential basis, UltraTech's profit was down 52 percent from Rs 1,582 crore in the April-June period.
The consolidated revenue for the quarter at Rs 13,893 crore was 16 percent higher on year from Rs 12,017 crore. Compared to the previous quarter, the revenue is 8 percent lower from Rs 15,164 crore.
The company beat the street’s estimates for revenues but the decline in profit was higher than what brokerages polled by Moneycontrol expected.
Demand scenario
The second quarter is traditionally a weak one for the cement sector, with lower demand as construction activity slows down on account of the monsoon.
Demand was low during July and August but showed some signs of revival in September, the company said in its earnings release.
The pick-up in retail demand was on the back of pent-up demand accumulation during the monsoons, pre-Diwali construction and repair work gaining momentum, and pre-election tailwinds. Institutional demand was led by increased construction activity after the receding monsoons.
Operational performance
The key reason for the decline in profits was lower realisation and higher energy costs that weighed on the operational performance.
Energy costs, which constitute 37 percent of operating costs for the company, increased 58 percent on year to Rs 1,731 per tonne. The increase was due to a rise in blended fuel prices of $200 per tonne as compared to $120 per tonne during the same period last year.
The consumption of pet coke was 40 percent during the quarter compared to 19 percent a year ago.
Raw material costs rose 18 percent, YoY to Rs 610 a tonne and constituted 13 percent of the total operating costs.
Due to the softening of diesel prices by around a percent over the previous year and improved efficiency, the increase in logistics costs (27 percent of operating costs) was marginal 2 percent YoY.
Other operational costs also moved up by 7 percent on year and 16 percent on quarter due to the inflationary increase in plant maintenance cost, lower operating leverage due to lower volume (compared to the previous quarter) and increase in employee costs.
Consolidated volume growth stood at 23.1 million tonne for the quarter, up 7 percent YoY. Domestic sales volume grew by 10 percent on year with a capacity utilisation of 76 percent.
The EBITDA/tonne for Indian operations stood at Rs 812, down 38.6 percent YoY, while consolidated EBITDA/Tonne came in at Rs 819, down 34.6 percent YoY.
Capex
During the quarter, UltraTech commissioned 1.3 million tons per annum (mtpa) brownfield capacity at Dalla, Uttar Pradesh, taking the total capacity in India to 115.85 mtpa and 121.25 mtpa globally.
In the second half of this year and start of the next financial year, the company will commission another 15.4 mtpa of greenfield / brownfield expansion taking the total capacity to 131.25 mtpa in India.
Work on the second phase of growth of 22.6 mtpa announced during the first quarter has already commenced and the new capacity will come on stream in a phased manner by FY25.
Debt
Net Debt increased to Rs 8,357 crore from Rs 5,561 crore in the previous quarter ended June, 2022 primarily on account of increase in working capital and growth capex.
The stock closed a percent higher at Rs 6,410 on the National Stock Exchange. The stock has lost 12 percent during the year and is down 2.6 percent over the month.UltraTech Cement Q2 Result | Consolidated profit slides 42% YoY to Rs 759 crore - Moneycontrol
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