Grasim Q3 Results: Profit Falls On Lower Prices Of Viscose Fibre
Grasim Industries Ltd.’s quarterly profit fell as prices of viscose staple fibre, its mainstay product, declined in India.
Net profit dropped 27.4 percent year-on-year to Rs 680.3 crore in the quarter ended December, the cement-to-textiles conglomerate said in an exchange filing. Profitability was hurt primarily by the drop in viscose staple fibre prices as capacity addition in Asia in the previous year led to a supply glut. The global economic slowdown caused by the U.S.-China trade war further weighed on prices.
“Viscose fibre yarn profitability (was) impacted by lower sales volume (9 percent decline year-on-year) mainly due to lower exports of tyre cord yarn on account of the slowdown in automobile markets in Europe,” the filing said.
Revenue fell 1.4 percent over the previous year to Rs 19,205 crore. Its operating profit decreased by nearly 4.8 percent on an annual basis to Rs 2,968 crore. Operating margin contracted to 15.5 percent compared with 16 percent a year ago.
New caustic soda capacity addition and increased imports led to a fall in domestic prices of the industrial chemical, the filing said, tracking international prices.
Shares of Grasim fell as much as 3.9 percent after the earnings announcement compared with the BSE Sensex’s 0.65 percent decline.