BackRamco Cements Q3 profit falls 69%
Profit fell to `25.59 crore from `83.60 a year ago, while net sales fell 2.8% to `842.62 crore
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Chennai: Mirroring the slowdown in the cement industry, fiscal third-quarter profit at Ramco Cements Ltd, formerly known as Madras Cements Ltd, fell 69%, missing analyst estimates, owing to overcapacity coupled with cost increases.
Profit fell to ₹ 25.59 crore from ₹ 83.60 a year ago, while net sales fell 2.8% to ₹ 842.62 crore. Analysts polled by Bloomberg had on average expected a profit of ₹ 23.14 crore on sales of ₹ 857 crore.
The cost of materials increased 23% to ₹ 161 crore in the December quarter.
“The numbers are a reflection of the difficulties faced by cement firms in the South, which has been affected for the last 16 quarters," said an analyst, who did not want to be named. “The Telangana issue and lack of availability of construction raw materials like sand and gravel in Tamil Nadu and Karnataka have led to a demand slowdown for cement."
Cement prices for South have fallen by 5% to ₹ 290 a bag from a year ago. The southern states, which account for 25% of sales for the firm, are operating at 65% of capacity and the analyst believes that only if demand grows at 10% for the next four years will the capacity utilization improve to 85%.
The cement industry, which grew by 6% fiscal year 2013, is expected to further slow to 4% this financial year, said the analyst.
Shares of the company fell 1.21% to close at ₹ 163.50 on the BSE on Wednesday while the benchmark Sensex closed 0.42% higher at 20,448.49 points.
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