JK Cement announces 75% drop in net profit for 2Q24

JK Cement Ltd has announced a steep 74.7 per cent YoY drop in its net profit for the July-September 2024 quarter, with earnings falling to INR452m (US$5.38m), far below analysts' estimates of INR981.1m. Revenue from operations declined by seven per cent to INR 23.92bn, while sequentially, the company saw a 77.7 per cent drop in net profit and a 9.5 per cent decrease in revenue.

In the July-September 2024 period, JK Cement's total expenditure edged slightly higher, reaching INR23.65bn from INR23.53bn in the equivalent period of the previous year, primarily driven by a rise in finance costs, which grew to INR1.2bn from INR1.09bn. However, the company’s tax expenses dropped considerably, down to INR184.5m from INR667.7m a year ago, providing some relief amid lower profit margins. For the first half of the fiscal year, the cement giant reported an 18.8 per cent decrease in net profit to INR2.48bn and a 3.1 per cent revenue drop to INR50.35bn.

The company also reported an increase in other income, which rose to INR368.1m, up from INR277.5m a year prior.

Amid these financial challenges, JK Cement's board has approved the merger of its wholly-owned subsidiary, Toshali Cements Pvt Ltd, with the parent company. Additionally, in an effort to streamline operations, the board gave in-principle approval to divest the entire equity in Toshali Logistics Pvt Ltd to a third-party transport company, which will remove Toshali Logistics as a subsidiary of Toshali Cements and, consequently, a step-down subsidiary of JK Cement.

The market responded with shares of JK Cement falling by 2.1 per cent, closing at INR4105 on the National Stock Exchange on Friday.