Engineering and construction firm Larsen & Toubro (L&T) on Friday missed analysts’ estimate by posting a consolidated net profit at Rs 606.2 crore for the April-June quarter, a 37.3 per cent decline over the same period last fiscal, with the company stating that the short-term business environment continues to remain challenging.
Consolidated net sales grew 6.7 per cent to Rs 20,250 crore, which was in line with estimates. Of this, Rs 6,609 crore came from jobs being executed overseas, constituting 32 per cent of the total revenues. Operating profit (earnings before interest, tax, depreciation and amortisation) declined 9 per cent year-on-year (y-o-y) to Rs 2,290 crore and margin declined 190 basis points to 11.3 per cent during the quarter, both below estimates.
Company officials said that the first-quarter profit included exceptional gains made on account of stake sale of Dhamra Port, L&T Finance Holdings and City Union Bank, which was not the case in the April-June 2015 quarter.
The company won new orders worth Rs 26,376 crore during the quarter, down 21 per cent on an annualised basis, which included international orders worth Rs 8,110 crore. The major orders were in the infrastructure and hydrocarbon segments.
However, there was a year-on-year reduction of 17 per cent in the fresh order intake in the infrastructure segment during the quarter. The consolidated order book increased 22 per cent to Rs 2.39 lakh crore compared with the year-ago period.
The company continues to have between Rs 5,000 crore and Rs 6,000 crore as slow-moving orders in the overall order book, which are largely in the urban infrastructure and minerals and mining sectors.
CFO Shankar Raman said: “While optically it looks as an under-performance to the effect of 37 per cent fall in the net profit, if the profit and loss is stripped off these three lumpy transactions, our business in the current quarter has actually done better.” He said that while domestic orders have remained consistent with the numbers seen in the corresponding quarter last year, international orders have come in lower. “Though favourable conditions to contain fiscal deficit and a likely easy money policy are expected to enthuse an investment-friendly framework, overall investment climate is subdued against the backdrop of global uncertainties and the unhurried pace of reforms in the country,” he said.
SN Subrahmanyan, senior executive vice-president (infrastructure and construction), said infrastructure, services, financial and real estate businesses should be the drivers for the firm going forward. (Inputs from FE & PTI)