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Informist, Monday, Oct. 21, 2024

 

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--Ultratech Jul-Sept consol net profit INR 8.20 bln
--Analysts saw UltraTech Jul-Sept consol net profit INR 9.94 bln
--Ultratech Jul-Sept consol net profit INR 8.20 bln vs INR 12.81 bln year ago
--Ultratech Jul-Sept consol revenue INR 156.35 bln vs INR 160.12 bln year ago
--Ultratech Apr-Sept consol net profit INR 25.17 bln vs INR 29.70 bln yr ago
--Ultratech Apr-Sept consol revenue INR 337.04 bln vs INR 337.49 bln yr ago
--Ultratech Jul-Sept consol EBITDA INR 22.39 bln vs INR 27.18 bln year ago
--Ultratech Jul-Sept consol domestic sales volume growth 3% on year
--Ultratech Jul-Sept energy costs lower by 14% on year
--Ultratech Jul-Sept raw material costs up 1% as fly ash, slag costs rise
--Ultratech Jul-Sept capacity utilisation 68%
--Ultratech Jul-Sept premium product mix of 23.4%, up 8% YoY
--Ultratech Jul-Sept India grey cement sales 25.75 mln tn, up 3% on year
--Ultratech Jul-Sept readymix concrete sales 3.01 mln cu mtr, up 19% YoY
--Ultratech Jul-Sept overseas cement sales 1.66 mln tn, up 40% on year
--Ultratech Jul-Sept grey cement realisation INR 4,901 per tn, dn 8.4% YoY
--Ultratech Jul-Sept white cement sales in India at 450,000 tn, up 7% on yr
--Ultratech Jul-Sept consol cement sales 27.84 mln tn, up 4% on year
--Ultratech Jul-Sept consol EBITDA/tn INR 725 vs INR 956 year ago
--Ultratech improved reservoir levels should result in growth in rural mkts
--Ultratech consol gross debt INR 159.2 bln Sep 30 vs INR 131.79 bln Jun 30
--Ultratech consol net debt INR 87.92 bln Sep 30 vs INR 54.82 bln Jun 30
 

 

By Avishek Rakshit

 

KOLKATA - UltraTech Cement Ltd. Monday reported a sharp 36% year-on-year fall in its consolidated net profit for the September quarter to INR 8.2 billion, missing the Street's estimates by a wide margin. The company's net profit growth was hit badly as price realisations from cement sales fell 8.4% on year, which more than offset a 3% volume growth in the domestic business.

 

The country's largest cement company's revenue fell 2.4% on year to INR 156.4 billion as price realisations from sales took a hit even though the company continued to focus on premiumisation and sales of blended cement, which is priced higher than ordinary cement, increased. Demand conditions across the country remained muted, and cement companies were unable to increase prices under tepid demand conditions.

 

Analysts had expected the Aditya Birla Group's flagship company to earn a consolidated net profit of INR 9.9 billion, on revenues of nearly INR 155 billion.

 

Sequentially, the net profit tanked 51.7% and revenue declined 13.5%. Following the results, the stock, which was already on a decline Monday, fell further by 1.5% at INR 10,900.1 on the National Stock Exchange.

 

The company's revenue from grey cement sales in India fell 6% on year and 17% sequentially to INR 126.2 billion. Although sales volume of grey cement grew 3% on year to 25.8 million tonnes, it fell 15% on quarter. Lower revenue despite increasing sales on year was because UltraTech's realisations per tonne of cement sales fell 8.4% on year and 2.9% sequentially to INR 4,901. Grey cement accounts for around 80% of the company’s revenues, and hence, is the determining factor of its revenue and profits.

 

Sales of white cement in India were up 7% on year at 450,000 tonnes and overseas cement sales at 1.7 million tonnes, up 40% on year. Ready-mix concrete sales, which the company has been focusing on lately, also increased 19% on year to 3.0 million cubic metres. As a result, total sales volume increased 4% on year to 27.8 million tonnes.

 

Its sales of premium products, however, increased 8% on year, accounting for 23.4% of its revenues in the quarter. Sales of blended cement also increased, which accounted for 70.6% of its total sales during Apr-Sept from 69.2% during 2023-24 (Apr-Mar), the company said in an investor’s presentation after declaring its results.

 

Although the mix of premium cement increased, overall lower sales volume of grey cement, and overall lower price realisations impacted the earnings before interest, tax, depreciation, and amortisation. The EBITDA in the quarter fell 18% to INR 22.4 billion-–marginally lower than the Street’s projections of INR 22.7 billion. As a result, UltraTech’s domestic operating EBITDA per tonne of sales fell by INR 224 from a year ago to INR 732. The consolidated EBITDA per tonne was INR 725 as compared to INR 956 a year ago. The operating margin per tonne of sales is one of the most crucial factors investors take into account when analysing a company’s trends and future performance.

 

UltraTech was able to keep its total costs under check despite a sharp uptick in finance costs, wages, and purchase of stock-in-trade. Total costs rose 2.4% on year to INR 148.4 billion primarily due to a 12.5% on-year reduction on power and fuel expenses.

 

Power and fuel expense is the single-largest cost overhead for the company, and the cement sector as well. For UltraTech, it accounts for nearly 26% of total expenses. The reduction in power and fuel costs was primarily on account of rising use of petroleum coke, commonly referred to as petcoke to manufacture cement. Its petcoke consumption mix shot up to 54% from 39% in the year-ago period. In the Apr-Jun period, the petcoke mix accounted for 37%.

 

Although petcoke--a solid carbon material that's a by-product of crude oil refining--is priced much lower than coal, which is used to make cement. It is considered to be a primary pollutant. Primarily on account of this, UltraTech’s blended imported fuel consumption fell 18% on year and 10% on quarter to $133 per tonne, which helped it to mitigate other cost pressures such as raw materials, rose 1% on year.

 

The company’s consolidated net debt increased 60.4% to INR 87.92, and the gross debt rose 20.8% to INR 159.2 billion.

 

In the investors' presentation, UltraTech said that the company intends to increase its cement production capacity by 17% to 183.5 million tonnes by FY27 from 157-million-tonne level in FY25. The company's capacity utilisation was at 68% during Jul-Sept. Shares of UltraTech Cement closed 1.8% lower at INR 10,869.30 on the National Stock Exchange.  End

 

US$1 = INR 84.07

 

Edited by Manisha Baxla

 

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