Ambuja Cements Q2 net profit jump 18 times on lower raw material, logistics costs
Ambuja Cements Ltd reported robust financial results for the second quarter ended September 30, 2023, with profit rising 18 times due to lower costs. The cement major, now part of the Adani Group, also reported significant growth in revenue and operating profitt compared to the same quarter last year.
Consolidated PAT was up 18 times at Rs 987 crore compared to Rs 51 crore last year.
This was despite the fact that consolidated revenue grew by only 4.1% year-on-year to Rs 7,424 crore in Q2 FY2024.
The cement maker said the cement industry is set to witness volume growth as demand environment remains robust on the back of increased housing and infrastructure spend.
"Healthy growth and demand prospects give our company the space to build new capacities with substantial cost advantage and explore upon strategic initiatives to boost profitability," it added.
Costs Decline
The company attributed the strong performance to higher sales of premium cement products and better efficiencies. Cost saving initiatives in fuel and logistics along with business synergies with other Adani group companies helped boost profitability substantially, it said.
Waste heat recovery systems at three of its plants with an incremental capacity 12.5 MW beccame fully operational, leading to lower power cost, the company said. The share of waste heat recovery power increased to 15% from 3.8%.
It also optimised fuel mix and source and used more of alternative fuels, leading to lower fuel cost, the cement company said.
Micro market management with higher sales of premium products resulting in higher price realisations, while improved direct dispatch & rail co-efficient resulted in savings in logistics cost, it added.
Finally, efficiencies got a boost from its new operating business model by reducing 'other expenses', it said.
As a result, operating EBITDA jumped by 298% to Rs 1,302 crore compared to Rs 327 crore in Q2 FY2023.
EBITDA margin expanded substantially by 12.9 percentage points from 4.6% to 17.5% during the quarter.
On a standalone basis, Ambuja Cement's revenue grew by 8% to Rs 3,970 crore. Standalone EBITDA registered an even bigger growth of 147% to Rs 773 crore.
The company's clinker & cement sales volume increased by 2.3% year-on-year to 13.1 million tonnes during the quarter, while kiln fuel cost reduced by 34% to Rs 1.79 per 1000 kcal from Rs 2.72 per 1000 kcal last year.
The company is undertaking capacity expansion plans at its Bhatapara and Maratha plants. Equipment orders have been placed and civil work has commenced at the 4 mtpa Bhatapara facility.
Ambuja Cements said it remains confident of strong volume growth ahead, led by robust housing and infrastructure demand. It also said it is focused on further cost optimization and driving synergies with the Adani group to boost profitability going forward.