UltraTech Q2 Net Profit Falls 42% To Rs 756 Cr On Higher Energy Costs

The country’s largest cement maker UltraTech Cement, on Wednesday reported a 42.5 per cent decline in its consolidated net profit to Rs 755.7 crore due to higher energy costs for the quarter ended September 30, 2022.

The company had reported a net profit of Rs 1,313.5 crore in the year-ago period. On a sequential basis, UltraTech’s profit was down 52.3 per cent from Rs 1,584 crore in the April-June period. The consolidated revenue for the quarter under review at Rs 13,892.7 crore was 15.6 per cent higher in comparison to an year ago when revenue came in at Rs 12,017 crore. Sequentially, the revenue was down 8.4 per cent in the September quarter versus Rs 15,164 crore seen in the June quarter.

The company beat Bloomberg consensus estimates for revenue, which was pegged at Rs 13,351 crore for the period under review. But the decline in profit was higher than what analysts had expected. Bloomberg consensus estimates had pegged net profit at Rs 1,079 crore for the September quarter.

While the second quarter is traditionally weak for the cement sector, with lower demand as construction activity slows down due to rains, UltraTech said that it saw some signs of revival in September.

The pick-up in retail demand was led by pre-Diwali construction gaining momentum, UltraTech said. Institutional demand, on the other hand, was led by increased construction activity after the receding monsoons.

Energy costs, which constitute 37 per cent of operating costs for the company, increased 58 per cent year-on-year (YoY) to Rs 1,731 per tonne in the quarter under review. The increase was due to a rise in blended fuel price, which touched $200 per tonne as compared to $120 per tonne during the same period last year, UltraTech said.

The consumption of pet coke used to make cement was 40 per cent during the quarter under review compared to 19 per cent a year ago. Raw material costs rose 18 per cent YoY to Rs 610 a tonne and constituted 13 per cent of the total operating costs.

Due to a softening of diesel prices by around 1 per cent over the previous year and improved efficiency, the increase in logistics costs, which constitutes 27 per cent of operating costs, was marginal at 2 per cent versus the year-ago period.

Other operational costs also moved up by 7 per cent YoY and 16 per cent quarter on quarter due to inflationary pressures.

Consolidated volume growth stood at 23.1 million tonnes for the quarter, up 7 per cent YoY, and the domestic sales volume grew 10 per cent YoY, with capacity utilisation of 76 per cent.

During the quarter, UltraTech commissioned 1.3 million tonnes per annum (mtpa) of brownfield capacity at Dalla, Uttar Pradesh, taking its total capacity in India to 115.85 mtpa and 121.25 mtpa globally.

In the second half of the current financial year and the start of the next financial year, the company will commission another 15.4 mtpa of greenfield and brownfield expansion taking the total capacity to 131.25 mtpa in India, it said.