ACC, a unit of Swiss cement giant Holcim, on Thursday reported a 9.5% drop in consolidated net profit for January-March quarter due to cost pressures and flat volumes. ACC's net profit fell to Rs 400 crore from Rs 438 crore while revenue grew marginally to Rs 2,967 crore from Rs 2,906 crore in March quarter.
The company's net profit however was better than market expectation due to lower tax write-off. The market had expected the company to report 35% drop in profit to Rs 283 crore. The company reported a tax write-back of Rs 113 crore in the last quarter as against Rs 141 crore in the corresponding quarter year ago.
Overall slowdown in infrastructure and construction development weighed on cement demand during the quarter. ACC's sale volumes remained almost flat as it clocked sales volumes of 6.48 million tonnes as against 6.42 MT in a year ago quarter.
The cement maker's profitability remained under pressure due to high cost. "Our manufacturing costs faced escalations in our major inputs - namely, coal, fly ash and gypsum," it said in a statement. As a result ACC's total expenditure rose 2.3% on year to Rs 2,738 crore. The company's operating margin fell to 14.32% from 16.93% a year ago.
Analysts were expecting cement companies to post better numbers in the next quarter due to sustained increase in prices. However, earnings of Aditya Birla group-owned Ultratech Cement and ACC were disappointing in terms of realisation, Sanjeev Singh, an analyst with Centrum Broking said.
Despite the sharp price hikes undertaken in February, per tonne realisation of both these cement giants were lower than expectation. Cement price have went up to Rs 330 per bag from Rs 270 per bag in north western regions of the country. "There was no reason for sequential fall in realisation, while players have tried to push volumes also. It seems higher costs are eating up their margins," Singh said.
Singh was expecting a realisation of Rs 4,523/tonne in case of ACC, but the company's realisation worked out to be Rs 4,396/tn. In case of Ultratech too blended realisation came in much lower at Rs 4673/ tn as against an expectation of Rs 4955/tn.
Singh expects a 6% growth in cement sales volume in current fiscal and is seeing around Rs 15- Rs 20 of correction in prices especially in north and west region.
ACC continues to see difficult times ahead for cement makers. "While we do not foresee any significant improvement in the cement market in the near term, we will continue to drive our cost leadership and customer excellence programmes to enhance sales realisations and improve margins," it said.
In first week of this month, ACC's Switzerland-based promoter Holcim announced plans of an-all-share deal to to buy France's Lafarge. The deal is likely to create world's biggest cement maker with a market value of around $55 billion.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}