Kennametal India reports ₹1.43B pretax profit as hard-metal sales climb
The hard-metal division nearly doubled revenue, while favourable timing between raw-material pricing and costs helped lift profitability.
Theo Marchetti
Kennametal India Limited NSEKENNAMET BOM505890 reported on Thursday that quarterly pretax profit rose to ₹1.427 billion, supported by stronger hard-metal volumes and favourable timing between pricing and raw-material costs. Revenue for the quarter ended Sept. 30 increased 86.4 per cent to ₹5.517 billion.
The Bengaluru-based tooling and wear-resistant materials company said in its Nov. 12 release that pretax profit compared with ₹434 million a year earlier. Management attributed the improvement partly to raw-material pricing dynamics, so the revenue increase does not measure volume growth alone.
Calculated from the Nov. 12 financial results, pretax profit equalled 25.9 per cent of revenue, compared with 14.7 per cent a year earlier. The release described tungsten prices as historically high but did not quantify the increase in hard-metal volumes.
The September-quarter filing showed net profit of ₹1.067 billion, compared with ₹314 million a year earlier. Earnings per share rose to ₹48.54 from ₹14.30 for the same period.
The company's investor profile places its headquarters and manufacturing facility in Bengaluru, supported by a sales, service and distribution network across India. The profile identifies aerospace, defence, energy, general engineering and transportation among the markets served.
Hard-Metal Sales Nearly Double
Hard metal and hard metal products generated revenue of ₹5.198 billion in the quarter ended Sept. 30, compared with ₹2.639 billion a year earlier. The segment supplied most of the company's revenue and accounted for the increase in sales.
The division's September-quarter segment profit rose to ₹1.630 billion from ₹498 million. Machining solutions moved in the opposite direction, reporting a segment loss of ₹55 million against a ₹15 million profit a year earlier.
Machining solutions revenue for the quarter ended Sept. 30 was ₹319 million, compared with ₹321 million. The figures show that the earnings improvement came from hard metals rather than a recovery across both businesses.
"These results were primarily driven by the favorable timing of raw material-related pricing compared to costs and stronger volumes supported by sustained demand across end-use segments," managing director Vijaykrishnan Venkatesan said in the release.
Tungsten Prices Tie Up Cash
Its U.S. parent, Kennametal Inc. NYSEKMT, said in its Nov. 4 results that unprecedented tungsten price increases had raised inventory values.
The parent also reported advance payments to suppliers to secure raw materials. Net cash used in operating activities was US$201 million for the quarter ended Sept. 30, compared with US$17 million generated a year earlier.
The parent's cash figures cover the wider group, rather than Kennametal India alone. They show the working-capital demands accompanying the pricing environment that benefited reported earnings.
Read more: USGS projects tungsten capacity growth of at least 10 per cent by 2030
Kennametal India's Nov. 12 release did not set a date for its next earnings report or give a forecast for hard-metal volumes.
