L&T profit plunges 58%

Written by fe Bureau | Mumbai | Updated: Jul 28 2010, 07:28am hrs
Engineering and construction major Larsen & Toubro on Tuesday reported 58% decline in its profit after tax (PAT) for the first quarter of FY11 to Rs 666.17 crore as compared to Rs 1,598.20 crore in the corresponding quarter of the previous fiscal.

However, the company said the two quarters are not comparable since the first quarter of 2009-10 saw an exceptional gain of Rs 1,019.88 crore from sale of its long-term investment in UltraTech Cement.

Excluding this one-time gain, profit after tax from normal operations rose by 15% during the quarter under review. L&T's shares declined 3.11% on the Bombay Stock Exchange (BSE) on Tuesday to close at Rs 1,860. Shares in the company, valued at $24.7 billion, have incresed by almost 14% so far in 2010, outpacing the 3.2% increase in the benchmark index during the same period.

A higher operating margin of 12.9% contributed to the growth in profits (excluding the exceptional gain), although threat of higher input costs eroding margins persisted.

L&T executive vice-president R Shankar Raman said the company has witnessed 1.1% impact on its margins in the electrical segment alone owing to the higher input costs. However, in the engineering and construction segment, the company has been able to increase its margins by 160 basis points through cost control exercise which included use of alternative material. This was despite around 20% increase in steel prices. L&T's net sales for Q1 FY11 stood at Rs 7,835 crore as against Rs 7,362.7 crore in the corresponding period of the previous year, up by 6%.

The company bagged Rs 15,626 crore orders, registering a growth of 63% over the corresponding quarter of the previous year.

The orders came in from sectors including power, hydrocarbon, buildings & factories and minerals & metal industries. The companys order book stood at Rs 1,07,816 crore as on June 30, 2010.

The E&C segment witnessed Rs 13,845 crore orders, up by 65% y-o-y. The electrical & electronics (E&E) customer sales increased to Rs 723 crore in Q1 FY11. With the industrial and infrastructure sectors picking up momentum, the machinery & industrial products segment registered 79% growth in order inflow over the corresponding quarter of the previous year.