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India's UltraTech Cement Misses Q2 Profit View as Prices Slump to 5-yr Low

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


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