India's UltraTech Cement misses Q2 profit estimates as expenses rise, demand weakens
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India's top cement maker UltraTech Cement on Wednesday reported a bigger-than-expected drop in September-quarter profit, dented by higher power and fuel costs as well as lower demand.
Consolidated net profit for the quarter was at 7.56 billion Indian rupees ($91.77 million), down over 42% on year.
Analysts, on average, had expected the company to report a profit of 8.58 billion rupees for the latest quarter, according to IBES data from Refinitiv.
Total expenses for the quarter surged 26.7% due to higher global petcoke and coal prices, with power and fuel expenses rising above 70%.
"Demand was low during July and August, showing some sign of revival in September," the company said in a statement, adding that second quarter is traditionally weak due to lower construction activity on the back of monsoon rains.
"Pick-up in retail demand (in September) was on the back of pent-up demand accumulation during the monsoons, pre-Diwali construction and repair work gaining momentum."
Consolidated net sales in the September-quarter rose about 16% to 135.96 billion rupees from a year ago.
Earlier this week, rival ACC Ltd had reported a surprise quarterly loss, also hit by higher energy costs.
Competition in domestic cement industry got heated after UltraTech Cement in June charted out a plan to increase its annual capacity to 159.25 million tonnes per annum to stave off competition from the sector's newest entrant Adani Group.
Indian ports-to-energy conglomerate Adani Group recently concluded acquisition of ACC after it ventured into cement making earlier this year with its $10.5 billion acquisition of Holcim AG's cement businesses in India - Ambuja Cements Ltd and ACC.
