Profitability drop over input costs drives earning cuts for Ambuja Cements

Rising volumes and some improvement in realisation fail to mitigate cost pressures

The strong growth in volumes clocked by Ambuja Cements during the September quarter failed to offset cost pressures. Rupee depreciation, higher crude oil prices, and firm coal and pet coke prices impacted input costs and, therefore, profitability, even as the company saw its capacity utilisation improve to 74 per cent as compared to 68 per cent in the year-ago quarter. 

Better utilisations and good demand, led by healthy growth in the infrastructure and housing sectors, enabled Ambuja's cement volumes to grow nine per cent year-on-year to 5.46 million tonnes (mt) in the quarter, ahead of estimates. Motilal Oswal Securities, for