UltraTech 2Q net profit falls 12%

UltraTech 2Q net profit falls 12%
Published: 20 October 2008

Indian cement maker UltraTech Cement Ltd said net profit for the fiscal second quarter fell 12% from a year earlier, hurt by a sharp increase in prices of coal and other raw materials.

The company forecast weaker demand for cement due to a slowdown in the real estate and infrastructure sector.

Net profit for the three months ended Sept. 30 dropped to INR1.64bn from INR1.86bn a year earlier, the company said in a statement issued Saturday.

"A sharp increase in prices of coal and raw material resulted in variable costs rising by 37% compared to Q2FY’08," the company said.

Net sales rose 20% to INR13.96bn from INR11.68bn a year earlier.

"The likely commissioning of around 90Mt capacity in phased manner over the next three years could lead to a surplus scenario by 2009, resulting in pressure on earnings, sales realization and margins," the company said.

It added that demand for cement is slackening due to a slowdown in the real estate and infrastructure sectors.

The company now expects demand growth to slow to around 7%-8% as compared with earlier forecasts of 9%-10%. The company, however, didn’t specify the timeframe for this growth target.