By Hritam Mukherjee
(Reuters) -UltraTech Cement reported fourth-quarter profit below market expectations on Monday and said soaring summer temperatures are hitting construction activity in India and curbing cement demand.
The company’s finance chief Atul Daga said in an analyst call he sees challenging demand span April and May – the months of peak summer in India. Earlier in the day, India’s biggest cement maker by capacity had mentioned “short-term challenges” in a statement, without elaborating.
Shares of UltraTech closed 1% lower, after its consolidated net profit was below estimates at 24.82 billion rupees ($292 million) for the January-March period.
Revenue, which took a marginal lift from the company’s Kesoram deal, was 230.63 billion rupees, in line with analyst expectations.
Cement companies usually push to achieve more volume and meet fiscal year-end targets in the fourth quarter, when favourable weather conditions drive up construction activity.
Although cement prices are recovering, they were on average still about 2% down from a year earlier in the fourth quarter, data from Ambit Capital showed. Daga said April prices “have seen improvement” compared to the end of March.
UltraTech’s volume jumped 17% year-on-year, within the 14%-21% range estimated by at least three brokerages who were rated the highest on LSEG for their earnings accuracy.
The sector has so far furnished a mixed bag of earnings, with higher expenses weighing on ACC’s profit, while cost controls helped Dalmia Bharat offset a hit from soft prices and lower volume.
UltraTech had also announced in February it would spend 18 billion rupees on its foray into India’s wires and cables sector, a move which drew analyst skepticism over its capital allocation.
($1 = 84.9870 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Sherry Jacob-Phillips, Varun H K and Krishna Chandra Eluri)
