InvestorQ : Why did Ambuja Cements also report a sharp fall in profits in the Q2FY23 quarter?
Archita Jajjoo made post

Why did Ambuja Cements also report a sharp fall in profits in the Q2FY23 quarter?

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Niti Shenoi answered.
1 month ago
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Cement companies have had a tough quarter with most of the cement companies seeing either a fall in profits or dipping into losses. Ambuja Cement reported 7.5% growth in sales for the September 2022 quarter at Rs7,143 crore on a consolidated basis. Sales contraction was -11.08% in sequential terms. Volume growth in Q2FY23 stood at 12% as it grew from 6 MT to 6.7 MT on a yoy basis. The company gained from lower logistics costs.

However, like in the case of other cement companies, the cost of power and fuel nearly doubled on a yoy basis causing most of the profit damage in the quarter. It may be recollected that Ambuja has been taken over by Adani group and now plans to double its manufacturing capacity over next five years. The combined capacity of ACC and Ambuja (ACC is a subsidiary of Ambuja Cement) would rise from 70 MTPA to 140 MTPA by 2028.

Ambuja Cements

Rs in Crore

Sep-22

Sep-21

YOY

Jun-22

QOQ

Total Income (Rs cr)

₹ 7,143.17

₹ 6,647.13

7.46%

₹ 8,032.88

-11.08%

Net Profit (Rs cr)

₹ 93.18

₹ 665.81

-86.01%

₹ 752.00

-87.61%

Diluted EPS (Rs)

₹ 0.47

₹ 3.35

₹ 3.79

Net Margins

1.30%

10.02%

9.36%

Let me now turn to the bottom line performance of Ambuja Cements. Net Profit after tax (PAT) for September 2022 quarter fell -86% to Rs93.18 crore due to the sharp spike in power and fuel costs and a more moderate spike in the freight and transport costs. The power and fuel costs were up 75.2% yoy at Rs2,733 crore while the freight and forwarding costs were up a more moderate 10% at Rs1,823 crore in the quarter, putting pressure on bottom lines.

EBITDA for the quarter stood at Rs304 crore, impacted by the intense cost pressures. PAT margins were lower at 1.30% in the Sep-22 quarter compared to 10.02% in the Sep-21 quarter and 9.36% in the sequential June 2022 quarter. EBITDA margins have fallen sharply from 22% in the September quarter last year to just about 8.4% in the current quarter. Most cement companies including Ultratech, Shree Cement and ACC reported tepid numbers.

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