UltraTech December quarter consolidated net falls 14% on higher fuel, input costs

By: | Published: January 25, 2019 12:53 AM

The company has successfully integrated the 21.2 MTPA capacity acquired in 2017. After substantial improvements, these plants are now operating in line with the existing plants of the company and have achieved a stable capacity utilisation of around 75%.

UltraTech Cement, UltraTech Cement net falls, UltraTech Cement gain, UltraTech Cement lossUltraTech December quarter consolidated net falls 14% on higher fuel, input costs

UltraTech Cement on Thursday reported a 13.7% year-on-year (y-o-y) decline in its consolidated net profit to `393.7 crore for the quarter ended December 31, 2018, because of a 38% increase in power and fuel costs to `2,209 crore for the quarter.

The company had posted a net profit of `456.3 crore in the corresponding period a year ago.

Net sales during the period rose 18.8% y-o-y at `9,389.6 crore on the back of domestic sales, which jumped over 15%. “Higher fuel and energy costs, coupled with rupee depreciation, resulted in costs increasing by 11% over Q3FY18, the company said in a statement.

“Interest cost also increased during the quarter because of the acquisition of Binani Cement (BCL) and the Japyee asset, which has led to drop in the net profit. Prices are expected to soften in the January-March quarter,” Atul Daga, director and chief financial officer of the company, told FE. BCL was renamed as UltraTech Nathdwara Cement (UNCL), effective December 13, 2018.

Acquisition of UNCL provides access to large reserves of high quality limestone. It consolidates the company’s leadership in the fast-growing northern and western markets, the company said.

UNCL acquisition will be earnings-dilutive in near term, and UltraTech Cement may look to expand the plant’s capacity going forward, analysts at Emkay Research said.

“The UNCL acquisition has been funded 40% through the internal accruals, and 60% via debt. UltraTech Cement has infused an equity of `3,400 crore and borrowing of `4,500 crore for this acquisition,” Daga told analysts.

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In the October-December quarter, the company had 11 kilns under maintenance, of which one kiln standalone accounted for an expense of `26 crore, which added to one-time cost to the company, Daga said.

Earnings before interest tax depreciation and amortisation (EBITDA) increased 8% y-o-y to `1,444.9 crore. The operating margin was 15.4%, compared to 16.9% in the same period a year ago.

“Demand is witnessing an upward movement with higher spends on infrastructure and government sponsored housing programme. With the additional capacities acquired by the company through the organic and inorganic route and its rapid ramp-up, UltraTech is very well placed to participate in the growth of the economy,” the company said.

The company has successfully integrated the 21.2 MTPA capacity acquired in 2017. After substantial improvements, these plants are now operating in line with the existing plants of the company and have achieved a stable capacity utilisation of around 75%.

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