New Delhi Rising cost remains a major concern affecting the profitability of cement companies. Dalmia Bharat Ltd has borne the brunt of rising input costs, but a pick-up in sales and some improvement in realizations helped the firm’s Q4 performance.
Puneet Dalmiya, Managing Director, Puneet Dalmiya said, “We ended the fourth quarter on a strong and positive note – the 16% sequential growth in volumes was much stronger than the year-ago period.” Dalmia Bharat,
The company’s sales volume in Q4 stood at 6.6 million tonnes (mt), while for FY22 it grew by 7.3% to 22.2 million tonnes from the previous financial year. Revenue in Q4 grew 23.6% sequentially and 7.2% year-over-year.
Dalmiya, however, said that cost inflation has been intense and the company has not been able to meet the costs. customers, Volumes grew well, but costs increased by about 20% in fiscal 2012, while prices increased by only 3%. As the cost of moving prices has come down, the earnings before interest tax depreciation and amortization (Ebitda) for FY22 declined by 12.2% as compared to a year ago. Ebitda for the quarter declined 11.1% year-on-year.
Dalmia expects cost pressures and margin contraction to continue in the first half of FY23. He said demand is expected to remain strong.
Cement demand grew by 7% in FY22, but Dalmiya hopes Strong demand in this fiscal, higher than in FY22. “Real estate is growing well. The rural economy is performing well, which can be seen in the uptick in tractor sales and infrastructure capex. The government allocation is high,” he said.
Housing demand is likely to improve, he said, adding that with GDP growth pegged at 6-8% for the next two years, the industry could see an annual demand growth of 8-9%. Companies will have to increase the prices of cement, but the quantum of the hike is yet to be seen.