Ambuja Cements Q2 profit plunges on rising cost

Last week, rival Shree Cement Ltd posted a 67.2% slump in second quarter profit hit by a jump in fuel costs

Adani Group-backed Ambuja Cements on Friday reported a 68.75 per cent slump in September-quarter profit, hit by ballooning expenses.

Standalone profit for the three months ended September 30 was Rs 138 crore ($16.68 million), compared with a profit of Rs 441 crore a year ago. Revenue rose to 13.38 per cent to Rs 3,670 crore.

Analysts, on average, had expected the company to report a profit of Rs 470 crore, according to IBES data from Refinitiv.

Overall expenses surged 32.25 per cent to Rs 3,546 crore, while sales volumes expanded 12 per cent to 67.4 lakh tonnes. Power and fuel expenses jumped 83.38 per cent to Rs 1,415 crore.

"Cement industry has been facing significant margin pressure resulting from steep rise in global energy prices, Ajay Kapur, chief executive officer, said in a statement.

Rising global crude prices pose a major challenge to India, which imports more than 85 per cent of its requirement.

Last week, rival Shree Cement Ltd posted a 67.2 per cent slump in second quarter profit hit by a jump in fuel costs

"However, recent cooling off in energy prices and post monsoon demand pick up appears like silver lining for coming quarters," Ambuja's Kapur said.

Adani Group had in September completed acquisition of Swiss giant Holcim AG's Indian cement businesses Ambuja and ACC in a $10.5 billion to become the country's No.2 cement manufacturer. The group aims to double the production capacity at both the units by 2027.

"Considering the promise, we made to double our manufacturing capacity over the next five years, our growth plans are ambitious and this will be evident in 2023," Kapur said, without giving any details.

($1 = 82.7225 rupees)