Q1 Results: UltraTech Cement’s Profit Doubles On Lower Operating Costs
UltraTech Cement Ltd.’s first-quarter profit doubled, helped by lower power and freight expenses.
Net profit rose 100.3 percent over last year to Rs 1,198.7 crore in the quarter ended June, according to the Aditya Birla Group company’s exchange filing. That’s higher than Rs 1,102.5-crore estimate of analysts compiled by Bloomberg.
UltraTech’s revenue rose 14.7 percent year-on-year to Rs 9,794.8 crore. Analysts had expected the metric at Rs 9,729.7 crore. The company’s power and fuel expenses declined 3.6 percent to Rs 1,797.8 crore while freight and forwarding costs fell 5.7 percent to Rs 2,102.70 crore.
Sales volume, including exports, rose 2 percent year-on-year to 17.86 million tonnes in the three-month period—missing Bloomberg's estimate of 19.7 million tonnes.
Volume growth definitely missed street expectations, Avinash Gorakshakar, research head at Joindre Capital Services, told BloombergQuint in an interview. “Going forward, we could see a moderation with respect to realisation metrics in the second quarter due to monsoons.”
Operational performance surpassed analysts’ estimates. Earnings before interest, tax, depreciation, and amortisation rose 57.1 percent over last year to Rs 2,549.9 crore, higher than the estimated Rs 2,375 crore. Operating margin expanded 700 basis points to 26 percent.
Demand for cement is expected to grow 7-8 percent this financial year on account of the government’s massive push to infrastructure in the budget, according to Cement Manufacturers Association.
UltraTech will complete the merger of Century Cement with itself during the second quarter of 2019-20, taking its capacity up to 117.35 million tonnes, its Chairman Kumar Mangalam Birla said at the company’s annual general meeting in July.
Shares of company traded 2.1 percent lower after the results announcement compared with a 0.5 percent advance in the Nifty Index. The stock advanced 12.4 percent in the June quarter compared with a 1 percent gain in the Nifty.
Key Highlights (YoY)
- Ebitda per tonne rose 52.9 percent to Rs 1,474.
- Logistics cost per tonne declined 5 percent to Rs 1,140.
- Energy cost per tonne fell 2 percent to Rs 1,011.
- Raw material cost per tonne down 2 percent to Rs 489.
- Domestic sales volume up 3 percent to 17.2 million tonnes.
- Export sales volume declined 7 percent at 0.60 million tonnes.