UltraTech Cement Reports 17% Dip in Q3 Profit Amid Rising Operational Costs
UltraTech Cement, a key player in India’s cement industry and part of the Aditya Birla Group, has reported a notable 17 per cent year-on-year decline in its net profit for the third quarter of fiscal year 2024. The company’s profit for the quarter stood at ₹1,474 crore, down from ₹1,775 crore in the corresponding period last year. This dip has been attributed primarily to a decline in sales realisation and escalating operational costs.
The cement giant’s revenue grew marginally to ₹17,194 crore, compared to ₹16,740 crore in the same quarter last year, despite an 11 per cent increase in sales volume, which reached 30 million tonnes (mt). However, rising costs have considerably squeezed the company’s margins. UltraTech’s EBITDA dropped by 8 per cent to ₹3,131 crore, with sales realisation per 50-kg bag declining by 10 per cent to ₹248. Operational challenges were particularly evident in the rising costs of logistics, fuel, and raw materials. Logistics expenses surged by 29 per cent, reaching ₹1,161 per tonne, while fuel costs also rose by 21 per cent to ₹883 per tonne. Furthermore, the costs for power and raw materials saw a sharp increase, contributing significantly to the overall rise in expenses.
On a positive note, UltraTech’s capacity expansion initiatives continue to progress, particularly in South India. The company has successfully doubled its cement production capacity in Tamil Nadu, through its acquisition of India Cements, and increased capacity in Karnataka following the purchase of Kesoram Industries. UltraTech now boasts an expanded capacity of 50 mtpa, which is expected to grow further as it targets 200 mtpa by the end of FY27. Despite the quarterly setback, UltraTech is optimistic about sustaining its growth trajectory, with expectations of an 8 per cent rise in volume, buoyed by increased demand from both rural and urban infrastructure and housing projects. In its ongoing pursuit of sustainability, UltraTech has also made strides in green power, with 33 per cent of its power now sourced from renewable energy, including waste heat recovery systems, which are helping to reduce operational costs in the long term.
