Companies
UltraTech Cement Q2 profit misses estimates as expenses rise, demand weakens
Summary
- UltraTech Q2 results: Revenue from operations of the Aditya Birla Group's flagship company rose 15% to ₹13,893 crore during the quarter
- Demand was low during July and August, showing some sign of revival in September, the company said
Aditya Birla group firm UltraTech Cement Ltd on Wednesday reported a 42% decline in its consolidated profit after tax (PAT) at ₹756 crore for the quarter ended September 2022, as against ₹1,314 crore in the year-ago quarter, weighed down by higher power and fuel costs as well as lower demand.
Analysts estimated a fall of 38% in the cement major's consolidated net profit from the year-ago number of ₹1,314 crore.
Revenue from operations of the Aditya Birla Group's flagship company rose 15% to ₹13,893 crore during the quarter under review as against ₹12,016.78 crore in the corresponding period of the last fiscal, UltraTech Cement said in a BSE filing.
"Demand was low during July and August, showing some sign of revival in September," the firm said, adding that the September quarter is traditionally weak due to lower construction activity on the back of monsoon rains.
Operating margin dropped significantly to 14% mainly on account of higher energy costs (increased by 58% yoy) and decline in realisation, the company said.
"Pick-up in retail demand (in September) was on the back of pent-up demand accumulation during the monsoons, pre-Diwali construction and repair work gaining momentum."
UltraTech Cement's total expenses were at ₹12,934 crore, up 27% in the second quarter of 2022-23, as against ₹10,209.43 crore in the year-ago period.
The cement major achieved capacity utilisation of 76% as against 71% during Q2FY22. Domestic sales volume grew 9.6% on year-on-year ·basis, despite heavy monsoons through the quarter.
Capital expenditure
The company's first phase of growth launched in December, 2020 is on track and estimated to be completed by the end of FY23. During the quarter, the firm commissioned 1.3 mtpa brownfield capacity at Dalla, Uttar Pradesh, taking the total capacity in India to 115.85 mtpa and 121.25 mtpa globally.
In the second half of this year, the company will commission another 15.4 mtpa of greenfield / brownfield expansion and start the next financial year with a capacity of 131.25 mtpa in India.
Work on the second phase of growth of 22.6 mtpa announced during the first quarter has already commenced. Main plant orders have been placed and civil work started at some sites.
Commercial production from these new capacities is expected to go on stream in a phased manner by FY25.
Upon completion of the latest round of expansion, the Company's capacity will grow to 159.25 mtpa, reinforcing its position as the third largest cement company in the world, outside of China.
Shares of the cement major were trading 0.28% lower at ₹6,328.95 apiece on the NSE in afternoon deals.
