Shree Cement Q3 profit down 23% on higher raw material, energy costs

Shree Cement Ltd, India’s third-largest cement company, reported a 23.6% fall in consolidated net profit for the third quarter as higher raw material and power costs, and increasing employee expenses dented its profitability.

Profit for the three months ended December 2021 declined to Rs 481.97 crore from Rs 630.87 crore for the three months ended December 2020.

The Rajasthan-based company also posted a sequential decline in net profit from Rs 562.83 crore in the second quarter.

The company posted a higher-than-expected drop. Analysts had expected net profit to fall 10-20%, and revenue to grow at a marginal rate owing to subdued cement demand.

Its consolidated revenue from operations stood at Rs 3,637.11 crore for the three months ended December 2021, up 2.24% from the corresponding period last year.

Shares of the company declined 0.54% on the BSE on Friday to Rs 24,704.25 apiece. The stock has touched a high of Rs 32,050 and low of Rs 23,505.70 apiece in the past 52 weeks. The earnings report was announced after market hours.

Other Key Highlights

1) Earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 24% y-o-y to Rs 825.3 crore.

2) Ebitda margin stood at 23.2% at the end of December 2021 as against 32.8% in December 2020. 

3) Power and fuel costs surged to Rs 914 crore, up 39.55% from the same period last year.

4) Raw material cost increased 16.5% y-o-y to Rs 309.85 crore.

5) The board declared an interim dividend of Rs 45 per share.

Management Commentary

The company said the COVID-19 pandemic impacted the recoverability of the carrying value of its assets in the reporting quarter. 

“Looking to the present situation of pandemic, the extent to which the same will impact the company's future financial results is currently uncertain and will depend on future developments,” the company said, adding that it is taking all necessary measures to secure the health and safety of its employees, workers, and their families.