Shree Cement Limited on July 28 reported a 52 percent decline in standalone net profit of Rs 316 crore in the first quarter of FY22-23 as against Rs 662 crore recorded a year ago. On a sequential basis, the profit has slumped by 51 percent from Rs 645 crore earned during the January - March period.
Standalone revenues for the Rajasthan-based cement major rose 21.8 percent on-year to Rs 4,203 crore as compared to a revenue of Rs 3,449 crore registered in the year-ago quarter. On a sequential basis, the revenue is marginally higher by 2.5 percent from the revenue of Rs 4,099 crore recorded in the previous quarter.
The on-year growth was aided by higher volumes and better realisations during the quarter, however, profitability and margins were impacted by the surge in power and fuel costs.
The bottom line was also impacted by the other income which was a loss of Rs 21.6 crore for the quarter due to fair value loss of Rs. 96.08 crore on investments against fair value gain of Rs. 64.77 crore for corresponding quarter ended 30th June 2021.
Even though the company was able to manage its employee costs, freight and other expenses on a YoY basis, the surge in power & fuel costs eroded its profitability and margins.
The cost of raw materials as a percentage of revenue came in 50 bps higher on a YoY basis and was up 60 bps on a sequential basis.
The company managed to save on its employee costs which were down 100 bps on year as a percentage of revenue but were up 40 bps compared to the previous quarter.
The power and fuel costs for the quarter surged by 15.4 percent on year and 8.1 percent on quarter due to higher prices of crude and coal.
The freight costs however, as percentage of revenue were lower by 260 bps on year and 150 bps on quarter. This managed to cushion some of the decline in margins for the quarter.
Other expenses reduced by 50 bps on year and were flat on quarter.
As a result of the rise in operating costs, the operating margins for the company tanked by 14 percent on year to 19 percent as compared to 33 percent during the same period a year ago. On a sequential basis, the operating margins are down 7 percent from 26 percent achieved during the quarter.
Consequently, the effect percolated to the net margins which declined 11 percent on year to 8 percent. The sequential decline in net margins was 8 percent.
At 1.07 pm, Shree Cement was trading lower by Rs 141.5 at Rs 20,882.35 on July 28 at The National Stock Exchange. The stock is down 24 percent over the last year and is trading higher by 8.5 percent over the last one month.