Ambuja Cements Q3 net rises 7%
MUMBAI: Ambuja Cements, India's third largest cement maker, managed to report 7% growth in net profit at 258 crore for the quarter ended December despite lower cement prices, rising cost pressure, and logistics-related issues at two of its units in north India. The Holcim Group company on Thursday reported a 2.2% growth in net sales for the quarter at 1,827 crore.
For the year ended December 2010, the 25-million-tonne cement maker reported net profit of 1,264 crore, up 3.8%. Net sales rose 4.4% to 7,390 crore.
During the year, the company's cement sales volume rose 6.4% to 20 million tonnes but net realisation fell, putting pressure on operating margins, analysts said. For the year, earnings before interest, tax, depreciation and amortisation fell 1.1% to 1,951 crore.
In 2010, Ambuja's net realisation fell 2% to Rs 3,695 per tonne, while realisation during October-December fell 1% to 3,549 a tonne, said an analyst with an institutional brokerage. However, according to him, the fall in realisation was cushioned due to better cement prices witnessed in western region during the year.
Operating margin for the year slipped 160 basis points to 25.9%, while the quarter witnessed higher compression of 580 basis points at 19.3%. This drop was also cushioned owing to lower purchase of external clinker during the year as company increased its clinkerisation capacity by 4.4 million tonnes to nearly 17 million tonnes.
This resulted in Ambuja Cements sourcing only 360,000 tonnes clinker externally in 2010 against 1.7 million tonnes a year ago. "Ambuja's northern region performance faced difficulties in the second half as it had to struggle through truckers' strike at its Himachal Pradesh units for almost two months in the last quarter," he the analyst.
I! n Octobe r, truckers working for the company's Suli & Rauri plants had refused to transport the goods while demanding a steep rise in transport rates. The agitation had forced India's third-largest cement maker to stop production from October 7 at these plants that manufacture a combined 3 million tonnes of cement annually.
The company had then warned of a likely fall in its profit margins owing to the strike and higher costs arising from longer lead distance and externally procured clinker.
For the year ended December 2010, the 25-million-tonne cement maker reported net profit of 1,264 crore, up 3.8%. Net sales rose 4.4% to 7,390 crore.
During the year, the company's cement sales volume rose 6.4% to 20 million tonnes but net realisation fell, putting pressure on operating margins, analysts said. For the year, earnings before interest, tax, depreciation and amortisation fell 1.1% to 1,951 crore.
In 2010, Ambuja's net realisation fell 2% to Rs 3,695 per tonne, while realisation during October-December fell 1% to 3,549 a tonne, said an analyst with an institutional brokerage. However, according to him, the fall in realisation was cushioned due to better cement prices witnessed in western region during the year.
Operating margin for the year slipped 160 basis points to 25.9%, while the quarter witnessed higher compression of 580 basis points at 19.3%. This drop was also cushioned owing to lower purchase of external clinker during the year as company increased its clinkerisation capacity by 4.4 million tonnes to nearly 17 million tonnes.
This resulted in Ambuja Cements sourcing only 360,000 tonnes clinker externally in 2010 against 1.7 million tonnes a year ago. "Ambuja's northern region performance faced difficulties in the second half as it had to struggle through truckers' strike at its Himachal Pradesh units for almost two months in the last quarter," he the analyst.
I! n Octobe r, truckers working for the company's Suli & Rauri plants had refused to transport the goods while demanding a steep rise in transport rates. The agitation had forced India's third-largest cement maker to stop production from October 7 at these plants that manufacture a combined 3 million tonnes of cement annually.
The company had then warned of a likely fall in its profit margins owing to the strike and higher costs arising from longer lead distance and externally procured clinker.
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