Birla Corporation's September-quarter profit falls 58.9% as input costs climb

what happened

According to Moody's, Birla Corporation reported a 58.9% year-on-year decline in consolidated net profit for the September quarter, to Rs 37 crore from Rs 90 crore a year earlier. Revenue grew 9% to Rs 2,441 crore, yet consolidated EBITDA slid to Rs 254 crore from Rs 332 crore.

Costs did most of the damage. Clinker became 13% more expensive, power and fuel expenses jumped 15%, and petroleum coke prices surged 64%. In the cement unit, EBITDA per tonne fell to Rs 482 from Rs 712, and the margin narrowed by 490 basis points to 9.8%. Volumes rose 7% to 4.54 million tonnes, but realisation was only 2% higher and slipped sequentially as prices weakened through July and August.

To offset some of the pressure, the company lifted green power use to 32% from 30% and started extracting coal at its Bikram site in Madhya Pradesh. Its jute division posted 17% higher revenue of Rs 155 crore and cash profit of Rs 13.01 crore, even though output fell 26% due to a raw jute shortage.

why it matters

For investors, the report shows that Indian cement producers are struggling to pass higher fuel and clinker costs on to buyers. Management says realisation has started to recover since October, but expects cost pressure to persist and keep margins under strain in the near term.

market impact

Birla Corporation and Indian cement stocks: higher costs squeeze margins and weigh on profit

• ▼Birla Corporation pressure down — quarterly profit fell as raw material and fuel costs climbed

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