UltraTech Cement Limited (UltraTech), the largest cement manufacturer in India, on July 22 reported a 6.8 percent decline in net profit at Rs 1,584 crore for the quarter ended June as against Rs 1,703 crore it recorded a year back.
On a sequential basis, the company's profit has gone down 35.6 percent from Rs 2,461 crore earned in the January-March period.
The company beat the street’s estimates for both the profit as well as its consolidated revenues.
The volumes witnessed strong traction over the low base of last year and the price hikes taken by the company enabled improvement in realisations which fuelled revenue growth. However, the profitability got impacted by the rise in power and fuel costs.
Sequentially, the demand was impacted due to a moderation in demand from the real estate sector for higher commodity prices.
“After a strong end to FY22, cement demand was impacted by overall inflationary trends and lower labour availability in May 2022, however, cement demand picked up in June 2022 on pre-monsoon construction activity”, the company said in its earnings release.
“While headwinds arising out of rising cost pressure could put some pressure on the profitability of cement companies, the strong momentum in housing and given the governments thrust on infrastructure and industrial development, the cement industry in India is set to see an upswing in demand in FY23,” the company said in its earnings release.
Revenues and Other Income
The consolidated revenues for the Aditya Birla Group flagship company rose 28.2 percent on-year to Rs 15,164 crore from Rs 11,830 crore. On a sequential basis, the revenue is marginally lower by 3.8 percent from the revenue of Rs 15,767 crore recorded in the previous quarter.
The other income for the quarter was lower by 47 percent at Rs 108.7 crore as compared to Rs 205 crore during the corresponding period last year. The other income during the previous quarter was marginally lower at Rs 92.4 crore.
Costs and Margins
The rise in the pet coke and crude prices resulted in a significant surge in the power & fuel cost for the company which jumped 595 bps (100 basis points =1 percent) compared to the year ago period to 26.5 percent as percentage of revenue. Compared to the previous quarter, the power & fuel cost is higher by 130 bps.
Other expenses also witnessed a marginal increase of 24 bps over the last year period to 12.2 percent of total revenue. However, the company could save on the costs of employees and freight & forwarding costs which declined 74 bps and 69 bps respectively over the same period last year. Sequentially however, the employee cost as percent of revenue increased marginally by 22 bps while freight was down 36 bps.
The cost of raw materials was stable at around 13 percent of revenues.
PBIDT (profit before interest, depreciation and tax) for the quarter at Rs 3,204 crore was lower by 8.8 percent on year while on a sequential basis there was an improvement of 1.2 percent from Rs 3,166 crore PBIDT recorded during the previous quarter.
PBIDT margins for the quarter came in at 21.1 percent which were down 860 bps from the margins of 29.7 percent achieved during the same period a year ago. Sequentially there is an improvement of 100 bps in the margins.
Capacity Utilization and Volumes
The Company achieved a capacity utilisation of 83 percent as against the utilization of 73 percent achieved during the year ago period.
Domestic sales volume was higher by 19 percent on a year-on-year basis.UltraTech was trading with a gain of Rs 296.15 at Rs 6,425.7 at 2.42 pm on July 22 at the National Stock Exchange. The stock has lost 14.0 percent during the past one year, but has appreciated 19.0 percent over the past one month.