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Birla Corporation’s cement earnings shrink as fuel costs rise

Birla Corporation reported lower July–September net profit despite higher revenue and cement sales. The Indian producer’s release put cement earnings per tonne at 482 rupees, down from 712 rupees a year earlier. The company reported higher clinker, power and fuel costs, while capacity utilisation stayed at 85 per cent and cement sales reached 4.54 million tonnes.

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Over a worker’s shoulder at an Indian cement plant, a petroleum coke stockpile feeds a fuel conveyor, with a rotary kiln beyond.

Higher sales accompany lower net profit

Birla Corporation, a cement producer, reported lower consolidated net profit for July–September despite an increase in revenue. The company also reported higher power and fuel costs during the quarter.[1], [2]

In its release, the company put net profit at 370 million rupees, down from 900 million rupees a year earlier. Cement sales increased from 4.25 million to 4.54 million tonnes, while capacity utilisation remained at 85 per cent. Revenue per tonne of cement rose from 4,845 rupees to 4,925 rupees but stayed below the preceding quarter.[1]

Fuel costs reduce earnings per tonne

Cement earnings before interest, tax, depreciation and amortisation per tonne fell from 712 rupees to 482 rupees. Birla reported a cement operating margin of 9.8 per cent, down 490 basis points from a year earlier. The company said clinker production costs rose 13 per cent and power and fuel costs increased 15 per cent. Petroleum coke costs climbed 64 per cent.[1]

Premium cement sales increase

Premium product volumes increased from 2.02 million to 2.38 million tonnes. Trade-channel sales accounted for 82 per cent of the total, up from 79 per cent. Blended cement’s share declined from 89 per cent to 86 per cent. The company’s green-power share increased from 30 per cent to 32 per cent of energy consumption, and extraction at its Bikram coal mine began during the September quarter.[1]

References

  1. News sourceBirla CorporationFuel costs squeeze Birla’s profit despite higher sales↩1↩2↩3↩4
  2. News sourcePTI via The WeekBirla Corporation revenue rises as net profit falls↩
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