ACC And Ambuja Cement Posts Muted Dispatch Growth in May 2012

ACC and Ambuja Cement have announced their dispatch numbers for May 2012. ACC Cement’s dispatch has grown by a mere 3 per cent to 2.05 million tonnes while Ambuja Cement’s dispatch number has grown by 9.7 per cent to 1.93 million tonnes mainly due to low base effect in the same period last year. With the onset of the monsoon and slowdown in the economy there has been a resulting downward spiral in the infrastructure and construction activity, thus resulting into lower demand during the month.

In April, ACC and Ambuja Cement’s dispatch has grown by just 1.6 per cent and 0.98 per cent on a YoY basis respectively. The growth in dispatch for April has remained muted. This has raised concern over the recent demand pick-up as the company has not been able to sell what it produced in April. The lower dispatch numbers for April are a negative factor. Labor shortages impacted the construction activity leading to slowdown in the consumption of cement.

The June quarter also cyclically sees a slowdown in demand due to monsoon However, with the demand slowing down; the prices will also start reducing in the June quarter. Lower cement prices with problems of high input cost such as coal, labour shortages and high freight charges will impact the margins of the cement companies in the June 2012 quarter.