Ambuja Cements quarterly profit drops as fuel and freight costs rise
Rising input and logistics costs are squeezing margins for Indian cement makers even as revenue continues to grow. Ambuja Cements reports a sharp fall in quarterly adjusted profit for the September-ended quarter, with higher petcoke, coal, diesel and packaging expenses weighing on profitability.
Highlights
- Ambuja Cements' standalone net profit before exceptional items and tax fell 34.7% year over year to 1.69 billion rupees for the September quarter.
- Total expenses jumped 11.7% due to higher fuel and freight costs, while EBITDA per ton dropped to 770 rupees and margin contracted to 13.8%.
- Management expects further pricing improvement after a recent 10–15 rupee price increase, with industry focus shifting to premiumisation amid ongoing margin pressure.
September quarter earnings pressure
As reported by Reuters, Ambuja Cements says standalone net profit before exceptional items and tax falls 34.7% year over year to 1.69 billion rupees, or about $17.7 million, for the quarter ended September.Standalone total expenses jump 11.7%, driven by higher fuel and freight costs, while revenue from operations rises 9.6% to 61.13 billion rupees. The company says elevated fuel and logistics costs, linked to higher petcoke and coal prices as well as increased diesel and packaging costs, continue to weigh on industry margins.
EBITDA per ton drops to 770 rupees from 1,061 rupees a year earlier, and EBITDA margin contracts to 13.8% from 19.2%. In the year-ago period, the company had incurred a one-time exceptional charge of 2.23 billion rupees and a tax write-back of 11.80 billion rupees.
Pricing outlook and industry implications
Chief Executive Officer Vinod Bahety says the industry expects further pricing improvement over the next couple of months following a recent price increase of 10 rupees to 15 rupees.Consolidated sales volumes edge down to 16.5 million metric tons from 16.6 million tons a year ago. Ambuja Cements, which is in the process of consolidating its cement operations, is targeting premiumisation over volume growth as cost inflation continues to pressure margins across the sector.
In our earlier report on conflict-driven spikes in crude oil shipping costs, we explained how surging tanker rates and higher insurance premiums have made freight a much larger component of oil prices. We also noted that the disruption is feeding through into broader fuel and consumer costs, with import-dependent markets facing sharper pressure while transport constraints keep rates elevated.
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