The Aditya Birla group company has reported disappointing results due to higher logistics and raw material cost. The cement producer expect demand to pick up in housing and infrastructure to drive growth rate to 6% in FY14, and 8% over the longer term
UltraTech Cement, an Aditya Birla group company, reported a 13.5% lower first quarter net profit at Rs673 crore from Rs778 crore a year ago, due to increasing trend in logistics and raw material costs on increase in railway freight and diesel prices.
The company said, benefits of lower commodity price were partly offset by the depreciation in the rupee. During the quarter to end-June, UltraTech’s net sales also declined to Rs4,958 crore from Rs5,072 crore same period last year.
In a release, UltraTech, said, “The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 6%, though over the long run, it is likely to be over 8%. The key value drivers will be housing demand and infrastructure spending.”
During the first quarter, the cement maker’s combined domestic cement and clinker sales was 9.88 million tonnes compared to 9.94 million tonnes last year, while it was 2.50 LmT for white cement and wall care putty.
The clinkerisation plant of 3.30 million metric tonne in Karnataka was commission and the UltraTech’s board have sanctioned a capital expenditure to the tune of Rs2,100 crore towards setting up of grinding unites and ready-mix concrete plants across the country, as well as modernisation. The total capex of the company is around Rs13,700 crore. The company is in the process of ramping up capacity by another 10 million tonnes by 2015 and is expected to boost capacity to 64.45 million tonnes.
Moneylife had recommended this stock, to Stockletter subscribers, at Rs1,466.
On Monday, UltraTech Cement ended marginally higher at Rs1880 on the BSE, while the 30-share Sensex closed the day marginally down at 19,593.
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