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UltraTech beats expectations but costs remain a worry

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World Cement,

UltraTech Cement has reported net profit of INR5.98 billion in 2Q18, beating analysts expectations – but still a way behind the same period last year, as cost pressures weighed on the company’s bottom line.

Sales volumes jumped 34% over the same period in 2017 to 16.8 million t, according to LiveMint, as the company was boosted by the acquisition 21.2 million tpy of cement production capacity last year. Yet freight, energy and raw materials costs were also higher: a problem that has hit all Indian cement producers.

“A relief on the cost front is unlikely anytime soon,” wrote LiveMint’s Harsha Jethmalani. “Cement prices were weak, even in a busy construction season and the inability of cement producers to pass on the burden remains a worry. Consequently margins have suffered.”

The company reported a 27% rise in net sales, hitting revenue of INR84.86 billion.

More positively, the company – which is India’s largest cement producer – continues to expect cement demand to grow, noting the market is “now in its up-cycle.” Key drivers of cement demand growth include higher government spending on infrastructure and rural development, increased rural housing demand, and pre-election spending.

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India cement news Cement news 2018