India's Kajaria Ceramics posts surprise Q4 profit drop on higher costs

Kajaria Ceramics

07/05/2024 12:45

BENGALURU, May 7 (Reuters) - India's Kajaria Ceramics  KAJR.NS  reported
a surprise drop in fourth-quarter profit on Tuesday, hurt by increased costs and
weak demand.
    Kajaria's consolidated net profit fell 5.2% year-on-year to 1.02 billion 
rupees ($12.2 million) in the fourth quarter. Analysts, on average, had expected
profit to climb to 1.26 billion rupees, according to LSEG data.
    Domestic demand for tiles was weak during the January-March quarter and the
Red Sea crisis dampened exports, according to analysts. This trend follows
minimal volume growth in the tiles industry in the first three quarters of
fiscal 2024.
    Tiles, used frequently in housing and commercial building projects, is yet
to see a pick-up in domestic demand that follows a recovery in the real estate
sector. As a result, Kajaria's sales volume grew 5.5% in January-March. It had
risen 11% in the fourth quarter of fiscal 2023.
    Kajaria's revenue from operations rose 3% to 12.41 billion rupees.
    "We maintain a positive outlook for the tile industry's demand in FY25 given
the exports momentum likely to sustain and rub-off of strong real estate demand
likely to drive improvement in off-take for tiles in fiscal 2025," Ashok
Kajaria, the company's chairman, said in a statement.
    Meanwhile, analysts anticipated that Kajaria's power and fuel costs would go
down as the company uses cheaper biofuel. While these costs did decrease, the
company spent more on merchandise and equipment, and had costs in the form of
inventory.
    As a result, expenses climbed 4.4%. Its purchase of stock-in-trade, or
merchandise and equipment, rose 10.2% and inventory costs surged 94.8%.
    Kajaria Ceramics, India's top tile-maker by market value, is the first among
its peers to report results for the January-March quarter.
        
($1 = 83.4960 Indian rupees)

 (Reporting by Anisha Ajith in Bengaluru)
 ((anisha.ajith@thomsonreuters.com;))