Kumar Mangalam Birla's UltraTech Cement quarterly profit falls 52% to Rs 264 cr

Written by Reuters | Press Trust of India | Mumbai | Updated: Oct 20 2013, 01:38am hrs
UltraTech CementsKumar Mangalam Birla's Ultratech Cement had last month acquired Jaypee Cement's Gujarat unit for Rs 3,800 crore. (Reuters)
Kumar Mangalam Birla's Aditya Birla Group firm Ultratech Cement today reported a 52 per cent dip in net profit for the July-September quarter at Rs 264 crore on account of lower selling price of the building material amid subdued demand.

UltraTech Cement Ltd, the largest cement maker in the country, had clocked a profit of Rs 550 crore in the July-September quarter of the last fiscal, it said in a statement.

"The results of the quarter have been impacted mainly on account of lower selling price and subdued demand. Cement demand remained sluggish on account of prolonged monsoon and low offtake from the infrastructure and housing sectors," it said.

Net sales fell to Rs 4,502 crore from Rs 4,699 crore in the corresponding quarter of the previous year. Ultratech sold 9.1 million tonnes of cement and clinker during the quarter.

Total expenditure rose to Rs 4,100 crore from Rs 3,927 crore a year ago.

"The benefit of softening in prices of imported coal was negated by the devaluation of the rupee. Logistics and raw material costs continued to rise given the high diesel prices. However, optimisation of the fuel mix helped in curbing power and fuel cost to some extent," it said.

Ultratech said demand for cement may grow 5 per cent during the current fiscal. However, in the long-run, demand is likely to grow by over 8 per cent.

"The key demand drivers will continue to be housing and infrastructure spends," it said.

Ultratech Q2 net profit dips 52% to Rs 264 cr

(Reuters) UltraTech Cement Ltd, India's largest cement maker, which is helmed by Kumar Mangalam Birla, reported a 52 percent fall in net profit for the July-September quarter, the biggest drop since 2010, after it was hit by a slowdown in home-building and infrastructure projects.

Rising input and energy costs have been putting pressure on margins at Indian cement companies, including UltraTech and Ambuja Cements Ltd, while demand remains a concern in an economy that is growing at its slowest pace in a decade.

"The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 5 percent, though in the long term growth is likely to be over 8 percent," UltraTech said in a statement to the stock exchange on Saturday.

UltraTech is part of the diversified Aditya Birla Group.

The company reported net profit of 2.6 billion rupees ($42 million) for the quarter ended Sept. 30, falling short of market estimates of 4.1 billion rupees, according to Thomson Reuters I/B/E/S. Net sales fell 4 percent to 45 billion rupees.

In September, UltraTech agreed to buy a cement plant in the western state of Gujarat from debt-laden competitor Jaiprakash Associates for about 38 billion rupees, including debt.

Production capacity at UltraTech will rise to 59 million tonnes after the acquisition of the 4.8 million tonnes Jaiprakash unit and the company plans to expand this to 70 million tonnes by 2015.

Jaiprakash Associates, which also has interests in power and infrastructure, had been trying to sell the plant for more than a year to cut its debt.

Government initiatives to expedite large infrastructure projects have yielded little so far and this is putting pressure on cement makers, especially those with debt that has become expensive to service due to high interest rates.