India's Ramco Cements misses Q1 profit view as costs outweigh demand

Ramco Cements

07/08/2023 10:29

By Hritam Mukherjee
       BENGALURU, Aug 7 (Reuters) - India's Ramco Cements
 TRCE.NS  on Monday missed first-quarter profit estimates, as
mounting costs outpaced resilient demand.
    Net profit after tax fell 29.7% to 789.1 million rupees
($9.5 million) for the quarter ended June 30, far below
analysts' estimate of 1.29 billion rupees as per Refinitiv data.
    Many Indian cement makers have been battling higher raw
material prices and energy costs, with peers Orient Cement
 ORCE.NS , JK Lakshmi Cement  JKLC.NS  and Dalmia Bharat
 DALB.NS  posting lower profits in the quarter.
    Ramco's total expenses jumped 31.7% to 21.41 billion rupees,
led by a 39% rise in input costs and 44% surge in power and fuel
spends.
        However, "power and fuel cost per ton is expected to
come down in the coming quarters," the company added.
  
    The higher expenses also outpaced revenue from operations,
which climbed 26.4% to 22.41 billion rupees on robust domestic
cement demand.
    The company said that its sales volumes, which grew 29% to
4.3 million tons in the quarter, was impacted by
non-availability of sand in Kerala, supply disruption due to
rail accidents in Odisha and West Bengal, and active monsoon in
the north-eastern part of the country.
        Ramco's core profit margins contracted to 15.26% from
16.99% a year ago, according to Reuters calculations. The
company attributed it to costlier fuel and weak cement prices in
its core south and east India markets.
  
        "Companies with markets in the east are definitely
facing pricing issues," said Tushar Chaudhari, research analyst
at Prabhudas Lilladher, adding that he expects cooling power
costs to weigh in from the second quarter.
  
    In May, Ramco had said that it has an internal growth target
of 30% in fiscal 2023-24, and plans to expand its plant in
Kurnool, Andhra Pradesh and into Karnataka.
    Shares of Ramco Cements fell 3.4% after results. 
  
($1 = 82.7100 Indian rupees)

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Varun H
K)
 ((Hritam.Mukherjee@thomsonreuters.com; Twitter:
@MukherjeeHritam;))