Business · Companies · 8 hrs ago
India’s cement makers look to price rises and demand to lift profits
Cement companies in India are raising prices as they seek to improve profits in the second half of the fiscal year.
Fuel, power, transport and packaging costs weighed on profits during the first half.
Cement prices have risen since late September and are now ₹15-20 higher per 50 kg bag than their September-quarter average.
Most companies reported lower profitability in the September quarter than a year earlier, while UltraTech Cement was an exception.
Companies expect seasonal demand and government infrastructure spending to support sales during the December and March quarters.
They also expect costs to stay high in the current quarter, making price increases important to their margins.
Companies hope recent price increases will hold as demand improves after Diwali, with some executives expecting further price rises in the coming months.
India’s cement makers expect price rises and seasonal demand to help improve profitability in the second half of the fiscal year.
Prices have been picking up since late September and are ₹15-20 higher per 50 kg bag than the September-quarter average.
Companies said higher fuel, power, logistics and packaging costs weighed on most players’ profitability in the September quarter.
They expect construction activity and government infrastructure spending to support demand in the December and March quarters.
Executives said recent price increases could help offset cost inflation if the gains hold.
- Who
- Indian cement companies, including Dalmia Bharat, Nuvoco Vistas and UltraTech Cement.
- What
- They expect price increases and stronger seasonal demand to help lift profitability.
- When
- In the second half of the fiscal year, following a weak first half; prices have risen since late September.
- Where
- India.
- Why
- Higher input costs weighed on profitability, while price rises and a seasonal pickup in construction activity may help offset them.
This story does not have two clearly opposing sides.
Most cement producers faced lower profitability than a year earlier, with higher fuel, power, logistics and packaging costs weighing on results.
Cement prices began picking up in India.
Cement prices rose substantially and stayed high, according to UltraTech Cement’s chief financial officer.
Companies expect seasonal demand and infrastructure spending to support a profitability recovery.
- Price rise
- ₹15-20 more per 50 kg bag than the September-quarter average
- Cost increase
- ₹100-120 per tonne, in a scenario cited by Nuvoco Vistas Corp
- Seasonal demand
- The December and March quarters are generally strong for the industry
- Main cost pressures
- Fuel, power, logistics and packaging costs
What people are saying
Both September and October have seen healthy price increases, helping us recover a part of the cost inflation
The average ₹20 price increase should totally defray the cost increase, and we'll have a delta benefit in realisation in Q3 versus Q2
Prices have risen substantially in October and continue to stay high