Larsen & Toubro (L&T) on Monday reported a 12 per cent growth in its net profit for the first quarter ended June 30, 2011, at Rs.746 crore against Rs.666 crore in the year-ago period. Sales were higher by 21 per cent at Rs.9,578 crore. The results were up on the back of a healthy order book and superior execution of jobs.
Amid moderating growth momentum in the economy, L&T got fresh orders of Rs.16,190 crore, taking its order book to Rs.1,36,172 crore as at June 30, 2011, with major orders from buildings & factories, infrastructure, power generation, transmission & distribution, minerals & metals and hydrocarbon sectors. Engineering & Construction (E&C) segment grew 23 per cent in gross revenue terms to Rs.8,018 crore. Despite sluggish pace of investments seen in key sectors of the economy, the segment bagged orders totalling Rs.14,416 crore and the order book in end-June stood at Rs.1,33,739 crore.
Execution efficiencies and tight cost monitoring strategies enabled the E&C segment to achieve an operating margin of 11.9 per cent. Some high-value jobs are yet to reach the threshold level for margin recognition and hence, could not contribute to the operating margin. The revenue growth of L&T's Electrical & Electronics (E&E) segment was hit by sluggish growth in exports and low demand from the domestic market and gross revenue was Rs.695 crore for the quarter.
The segment margin at 10.8 per cent was under pressure with steep increase in input prices, heightened competitive pressures restricting the avenues for price increase and lower volumes.
Machinery & Industrial Products (MIP) segment recorded gross revenue of Rs.666 crore during the quarter, a growth of 25 per cent, and operating margin of 20.1 per cent even on a higher sales volume. In terms of outlook, global economic concerns, spiralling inflation and hardening interest rates are likely to impact the growth prospects in the economy.
Indian economy, however, has withstood such cycles in the past and emerged resilient with its strong fundamentals.
The company said it is on course for a 25 per cent sales increase in 2011-12 from around Rs.44,000 crore in 2010-11.