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India’s KEC International Q3 profit tumbles on surging costs

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BENGALURU (Reuters) – Engineering and construction company KEC International on Tuesday reported an 81.2% fall in its quarterly profit, hurt by elevated costs, including sub-contracting expenses.

The company’s consolidated profit stood at 176 million Indian rupees ($2.15 million) for the quarter ended Dec. 31, compared with a profit of 936.1 million rupees the previous year.

Sub-contracting expenses surged 55% and cost of materials consumed jumped 27%, sending total expenses up 35% to 43.65 billion rupees.

Revenue from operations rose 31% to 4.37 billion rupees.

While infrastructure companies will likely benefit from the Indian government’s move to increase spending ahead of general elections next year, they face challenges over deadlines and dwindling margins due to higher raw material expenses and increasing labor costs.

The company said its EBITDA margin, a key profitability metric, was impacted primarily due to the execution of legacy projects with adverse commodity prices and performance of SAE Brazil.

EBITDA margins for the third quarter fell to 4.6% from 7.2%, a year ago.

“With the closure of last project in Brazil, we are confident of a gradual revival in the performance of SAE Brazil in the quarters to come,” Vimal Kejriwal, chief executive said in a statement.

($1 = 81.7040 Indian rupees)

(Reporting by Anisha Ajith in Bengaluru; Editing by Shailesh Kuber)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

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