Ambuja Cements' profit slides as lower dispatches offset cost-cutting gains
Billionaire Gautam Adani-owned Ambuja Cements Ltd's fiscal first-quarter profit (Q1FY27) declined by a third after a deliberate pullback in lower-margin sales and temporary plant shutdowns
Billionaire Gautam Adani-owned Ambuja Cements Ltd's fiscal first-quarter profit (Q1FY27) declined by a third after a deliberate pullback in lower-margin sales and temporary plant shutdowns weighed on volumes, as the company focused on profitability over volumes amid rising fuel and freight costs. India's second-largest cement maker reported a 33% fall in consolidated net profit, attributable to owners of the parent, to ₹577 crore for the quarter ended 30 June, down from ₹869 crore a year earlier, according to exchange filings. Revenue from operations fell 7.3% year-on-year to ₹9,474 crore from ₹10,244 crore, while cement sales volumes declined 7% to 17.1 million tonnes after the company shut some high-cost plants. The weaker performance contrasted with larger rival UltraTech Cement, where double-digit volume growth, contributions from acquired businesses and cost management offset higher fuel and freight costs. The Aditya Birla Group company reported a nearly 17% year-on-year increase in consolidated net profit to ₹2,599 crore, while revenue rose 16% to ₹24,648 crore. Also Read | Can better realizations revive sentiment towards cement stocks? Ambuja said it has temporarily shut around 3.5 million tonnes of capacity, largely older ACC plants and one acquired facility, for about six months to improve cost efficiency while maintaining supplies through alternate plants.
Analysts said the move could keep volume growth subdued in the near term, as it did in the June quarter, while the company prioritizes profitability over volumes. Cost before growth “The quarter was characterized by stable cement demand supported by infrastructure, housing and construction activity while profitability across the industry remained under pressure from the higher imported fuel prices, elevated freight costs and and geopolitical developments in West Asia,” chief executive officer Vinod Bahety said during a post-earnings interaction with analysts on Tuesday evening. Earnings before interest, tax, depreciation and amortization (Ebitda) stood at ₹1,589 crore, rising 8% sequentially, but down 19% year-on-year. “Ambuja's June-quarter performance was weaker than its peers, as it was the only major cement company to report a fall in both sales volumes and revenue. The company intentionally reduced sales in the lower-margin non-trade segment and temporarily shut some high-cost plants of acquired assets, including a few ACC units, to save costs. While this helped improve Ebitda/t compared with the previous quarter, it also led to lower overall volumes and hurt its market share,” said Satyadeep Jain, cement sector analyst at Ambit Capital. Ebitda per tonne improved 27% sequentially to ₹931 on the back of cost-control measures but remained 12% below the year-earlier level.
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