UltraTech YoY results improve, but warns of surplus scenario

UltraTech YoY results improve, but warns of surplus scenario
Published: 20 October 2011

UltraTech Cement Ltd, part of the Aditya Birla Group, reported net sales at INR39.100bn for the quarter ended 30 September 2011, a 21.6% rise when compared with INR32.15bn noted during the corresponding period of the previous year. EBITD reached INR6.85bn, reflecting a 43.9% YoY advance from INR4.76bn. Profit after tax more than doubled YoY from INR1.16bn to INR2.79bn. 

However, while the performance of the company indicates a significant improvement YoY, the positive trend originates from a low base. Moreover, on a sequential basis, UltraTech Cement performance remains subdued. Net sales in the first quarter stood at INR43.65bn while EBITD reached INR12.54bn before experiencing a hefty cut in 2Q11.

Lower demand, lower realisation and substantial cost increases impacted UltraTech’s performance. Variable costs rose by 14% as a result of higher costs relating to inputs and energy, including a 30% increase in the price of domestic coal and more expensive coal imports. The diesel price hike also led to escalating freight costs.

UltraTech expects the surplus scenario to continue over the next 2-3 years while rising input cost will see margins increasingly squeezed.