For major cement companies, it is a struggle against falling margins
Their costs rising faster than revenues, major cement companies saw their operating margins register on-year decline in almost all quarters of 2018, with the margins of most such entities touching multi-quarter lows in Oct-Dec. Of the six largest listed cement companies, UltraTech Cement Ltd, The Ramco Cements Ltd, and Dalmia Bharat Ltd saw their earnings before interest, tax, depreciation and amortisation margin contract on year in each of the four quarters last year, according to data from Cogencis’ Corporate Fundamental Database. Dalmia Bharat Ltd had amalgamated with Odisha Cement Ltd during the December quarter, and the EBITDA margin of Odisha Cement was considered for this analysis. Shree Cement Ltd’s EBITDA margin fell in three of the four quarters last year, while ACC Ltd and Ambuja Cements Ltd registered EBITDA margin declines in two quarters.
Analysts weren’t expecting a near-continuous on-year fall in the operating margins of cement companies. The on-year fall in EBITDA margin in Oct-Dec was steep in the case of Ambuja Cements, The Ramco Cements, and UltraTech Cement, while the decline was steeper in the case of Shree Cement Ltd and ACC Ltd.