HeidelbergCement India sees 88% slump in profit

HeidelbergCement India Ltd has reported a 12.2 per cent YoY decline in revenue in the quarter ended 30 September 2022. Revenue for the three-month period came in at INR5060m (US$61.5m), compared to INR5765m in the same quarter a year earlier. EBITDA over the same period fell 59.2 per cent from INR1165m to INR476m, while profit after tax slumped 88.2 per cent from INR596m to just INR70m.

According to the company, the decline in profitability is due to a significant increase in fuel costs, which advanced from INR1587.9m in the September 2021 quarter to INR1895.1m this year. The total cost per tonne of cement rose by 22.8 per cent YoY from INR3737 to INR4587, while EBITDA per tonne of cement contracted by 49.7 per cent from INR946 in the quarter ended 30 September 2021 to INR476 in the comparable quarter a year later.

The September 2022 quarter also saw volumes fall by 19 per cent YoY, or by 10 per cent compared to the previous quarter in what is a seasonally weak quarter. Prices increased by eight per cent YoY but were down 4.6 per cent QoQ. However, the company has increased its consumption of green power across all its plants with the share of green power improving to more than 34 per cent.

Looking ahead, although the IMF is forecasting GDP growth of 6.8 per cent for India in FY22-23, rising inflation continues to affect interest rates and dampen consumer spending. An increase in government spending on infrastructure projects is expected in 2023 prior to the Lok Sahba (House of the People) elections in 2024, while post-Diwali cement demand is expected to improve.