Ambuja Cements net consolidated dips 25% in 2008

Ambuja Cements, a part of the Swiss cement giant Holcim, has posted a decline of 24.72 per cent in its consolidated net profit for the financial year ended December, 2008 at Rs 1,389.71 crore compared with Rs 1,846.11 crore in the previous year. 

Its consolidated net sales during the year stood at Rs 6,261.79 crore against Rs 5,718.60 crore last year, up 9.5 per cent.

The financial performance was impacted by lower overall demand for cement and higher input costs coupled with restricted ability to pass on the increased burden to the market. The company's expenditure on power and fuel alone increased by 30 per cent to Rs 1,325.77 crore from Rs 1,020.23 crore last year.

On the standalone basis, the company's cement production went up by 5 per cent to 17.8 million tonnes. Domestic despatches were 9 per cent up, however, on the export front, Ambuja - a leading cement exporter - got a hit with exports dipping by over 37 per cent in 2008.

"The year began on a postive note though spiralling input costs were a cause of some concern even in the beginning. As the year progressed, the rising fuel costs pushed inflation into double digits which muted the industry growth," said Amrit Lal Kapur, managing director of Ambuja Cements in a statement.

During the year under consideration, Ambuja commissioned its grinding unit of 1.2 million tonnes at Surat. Two more expansion projects of altogether capacity 4.4 million tonnes are on track and will be commencing production in 2009.

Maintaining a cautious optimistic view about 2009, company said in its outlook, "Much depends on a recovery in the real estate sector. We feel the cement demand growth is likely to be in the range of 6 to 8 per cent this year." It added that the company will intensify efforts to reduce dependence on coal by further exploring theuse of alternative fuels and raw materials.

On the pricing front, Ambuja said that the cement industry is likely to experience surplus capacity, which may have some impact on pricing in the second half.

The company's shares were closed at Rs 71.50, up 2 per cent on the BSE today.