Lower demand, prices to hurt Indian producers quartery profit

Lower demand, prices to hurt Indian producers quartery profit
Published: 20 July 2010

Three of India’s top four cement manufacturers will likely report a fall in April-June net profit, hurt by lower demand and a decline in product prices.

Barring Ambuja Cements, which is projected to show growth, peers such as Ultratech Cement Ltd, ACC Ltd. and Grasim Industries Ltd. are likely to be hit by falling sales.

But Grasim’s drop may be limited by higher sales of its viscose staple fiber textile business.
Indian cement prices on average dropped by INR7-INR8 for every 50 kilogram bag in the April-June period, with rates in the country’s south falling by as much as INR25 a bag, local brokerage Sharekhan said in a recent note.

Cement demand during the June-September monsoon season declines because construction activity slows across the country.

The companies are likely to be hurt also by higher input and fuel costs. For example, the price of coal rose 50% in the period. And a rise in diesel prices in June increased transport costs for cement companies, as most of them haul products from factories in the hinterlands to cities.