Ambuja's net dips 45% to Rs 226 crore on weak prices

The cement maker says mixed macro-economic indicators point sluggish growth in cement demand in short term.

Ambuja Cements, the country’s third-largest cement maker and part of Swiss cement giant Holcim, has posted a disappointing quarterly performance for the period ended June on the back of weak demand and poor pricing of the building commodity.

The company’s net profit dipped 45 per cent to Rs 226.35 crore compared with Rs 408.7 crore in the corresponding previous quarter. The earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 384 crore not only declined 33.2 per cent year-on-year and 18.6 per cent sequentially, but it was lower than Bloomberg consensus estimate Rs 399.6 crore. Ebitda margins at 15.4 per cent declined sharply compared to 21.2 per cent in the year ago quarter and 19.4 per cent in previous quarter. The net sales of Ambuja declined about  8 per cent to Rs 2,493 crore against Rs 2,706.35 crore earlier. The stock price of Ambuja traded weak on the BSE on Monday and closed at Rs 234.30, down 2.52 per cent. The results were announced after market hours. Ambuja said, “The quarter witnessed muted cement demand. Sales volume marginally increased by 1.6 per cent. Due to decrease in selling price by 10 per cent, overall net sales value was lower by 7.9 per cent.”

Ambuja sold 5.88 million tonnes of cement during the quarter while the same stood at 5.79 million tonnes last year.

In its outlook, company said that mixed macro-economic indicators are pointing towards sluggish growth in cement demand in short term. "With the onset of monsoon throughout the country, cement demand is expected to remain subdued in the next quarter."

The Board of Directors have also approved the amalgamation of Dirk India Pvt limited, a wholly owned subsidiary w.e.f. 1st April 2015, in terms of the scheme of amalgamation, which is subject to approval of shareholders, Honorable High Court and appropriate authorities. The company has only one business segment "cementitious materials". However, pending approvals the no effect of the proposed amalgamation has been given in the results.