Despite cement sales of leading Indian producers improving in the first quarter of 2008-09, the steep rise in input cost is expected to exert pressure on the bottom lines.
Except for ACC and UltraTech Cement, all the other major cement companies have reported an increase in sales in the first quarter, with Shree Cement topping the table.
UltraTech despatches have dipped five per cent to 4.25Mt, while ACC fell by one per cent to 5.30Mt.
Shree Cement sales jumped 27 per cent to 1.78Mt, Madras Cement 15 per cent to 1.57Mt, India Cements seven per cent to 2.45Mt, while Ambuja Cement and Grasim Industries saw their despatches improve by three per cent each to 4.5Mt and 4.11Mt, respectively.
Interestingly, the sales have improved across companies in June, which is considered a dull period due to the onset of monsoon.
Cement consumption in the quarter under review has grown eight per cent YoY, while prices rose 6.9 per cent to Rs 242 per 50 kg bag against Rs 237 in the same period last year.
Prices were up Rs 3 per bag compared to prices in the March 2008 quarter.
The rising coal prices and freight cost are expected to dent EBIDTA margins. The sharpest decline is expected from Madras Cement and Ambuja Cement as they depend heavily on imported coal.
‘High cost push pressures and the inability to pass it on to consumers will severely impact margins of cement companies. Overall, we expect cement companies to report a 6 per cent decline in their EBIDTA,’ he said.