BENGALURU (Reuters) – Ramco Cements missed analysts’ estimates for third-quarter profit on Thursday, dragged by softer demand and weak prices, especially in its core market in south India.
The cement maker’s standalone net profit after tax rose 39% to 933.8 million rupees ($11.3 million) for the quarter ended Dec. 31, but fell short of analysts’ consensus expectations of 1.12 billion rupees, as per LSEG data.
Heavy rainfall in Tamil Nadu state due to cyclone Michaung and Telangana state polls hindered demand in southern India, from where it derived 75% of its sales volumes in the last quarter.
That is still lower than the region’s share in the first and second quarters, which were 79% and 81%, respectively.
While cement prices, on average, had risen 2.5% sequentially across the country, weak demand in the southern market dampened regional prices.
“During the quarter, the extreme heavy rainfall and the subsequent flooding due to cyclone Michaung has affected the cement demand in Tamil Nadu and AP (Andhra Pradesh),” the company said in a statement, adding that prices “are under pressure.”
The Tamil Nadu-based company logged a volume growth of 10% in the quarter, falling short of analysts’ expectations of 14-15% growth.
Revenue from operations climbed about 5% to 21.06 billion rupees, while power and fuel costs fell 21% in the quarter.
The company expects a further drop in fuel costs in the fourth quarter on easing of pet coke prices.
Shares of Ramco Cements closed 2.1% lower ahead of results.
($1 = 82.9750 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Rashmi Aich and Dhanya Ann Thoppil)
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