Oct 21 (Reuters) - India's UltraTech Cement reported a bigger-than-expected decline in second-quarter profit on Monday, weighed by prices that fell to near five-year lows.
The country's top cement maker reported a 36% decline in consolidated net profit to 8.2 billion rupees for the quarter ended Sept. 30. Analysts, on average, had expected a profit of 10.53 billion rupees, according to data compiled by LSEG.
This fuelled a 2.5% drop in the company's shares. They were down 0.3% before the results.
Cement prices hit a five-year low from the previous quarter, analysts said, due to an industry-wide ramp up in production and thus supply, as companies sought to prepare to fill up medium-term demand expectations.
Meanwhile, demand for cement, which was already hit by an election-linked slowdown in construction in the first quarter, did not improve in the reported quarter, due to above-average monsoon rainfall.
UltraTech's domestic sales volumes grew 3% in the second quarter, but remained below the 6%-11% growth range reported in the last three quarters. It was also at the lower-end of the 2%-8% range expected by analysts.
The second quarter is considered a seasonally weak period for cement makers as demand is subdued due to the monsoons, as a result of subdued construction activity.
All of this led to a 2.4% fall in revenue on-year to 156.35 billion rupees. This is the company's first quarterly decline in revenue since the June 2020 quarter, when construction came to a standstill due to a COVID-induced nationwide lockdown.
($1 = 84.0400 Indian rupees)
Reporting by Hritam Mukherjee and Manvi Pant in Bengaluru; Editing by Varun H K, Sumana Nandy and Sonia Cheema
Source: Reuters