India's Shree Cements posts 44% fall in Q3 profit on high fuel costs

Ramco Cements

08/02/2023 08:31

BENGALURU, Feb 8 (Reuters) - India's Shree Cement Ltd
 SHCM.NS  reported a 43.7% fall in third-quarter profit on
Wednesday, missing expectations, as persistently high input and
fuel costs triggered by the Russia-Ukraine war weighed on the
cement sector.
    The Kolkata-based company posted a standalone profit of 2.77
billion Indian rupees ($33.5 million) for the quarter ended Dec.
31, compared with 4.92 billion rupees a year earlier. 
    Analysts, on average, had expected a profit of 3.22 billion
rupees, according to Refinitiv IBES data. 
    Total expenses rose 26.8% to 38.46 billion rupees, amid a
surge in global oil prices.
    Even though prices of key fuel components such as petroleum
coke and coal slightly cooled-off in the third quarter, prices
remained elevated. Marginal cement price hikes, largely led by
the eastern region of the country, failed to offset the surge.
    Power and fuel costs, which account for a major part of the
cement maker's expenses, jumped 61.3% to 13.03 billion rupees.
    The Indian cement sector is betting on the country's
investment in infrastructure in the pre-election period to drive
up its demand. A 33% jump in allocation for key infrastructure
sectors in the Union Budget 2023-24 might also boost cement
demand. 
   India is the world's second-largest cement producer.
    "Given the government's focus on infrastructure growth in
the Union Budget 2023-24,... cement sector is poised for robust
growth in coming years," the company said in an exchange filing.
    However, the rising input costs led by higher fuel prices
may impact margins, the company added. 
    Gross revenue from operations in the third quarter rose
16.4% to 51.99 billion rupees.
    Rivals Ramco Cements  TRCE.NS , ACC Ltd  ACC.NS  and
Ultratech Cement  ULTC.NS  reported a fall in third-quarter
profit on higher costs, while Ambuja Cements  ABUJ.NS  reported
a profit jump on higher demand. 
    Shares of the company fell 2.1% to 23,750 rupees after the
results. The stock shed 13.7% in 2022.    
($1 = 82.6630 Indian rupees)
 (Reporting by Anuran Sadhu in Bengaluru; Editing by Janane
Venkatraman)
 ((Anuran.Sadhu@thomsonreuters.com; +91 8697274436;))