ACC Cement Impresses With A sturdy Performance
DSIJ Intelligence / 01 Aug 2012
The company has surprised its investors with a stellar performance during this quarter wherein the consolidated net sales of the company grew by 15 per cent YoY to Rs 2,918 crore and its net profit grew strongly by 27 per cent YoY and 176 per cent QoQ to Rs 412 crore.
ACC Cement, one of the largest cement manufacturing companies in India, has announced its results for the June 2012 quarter. The company has surprised its investors with a stellar performance during this quarter wherein the consolidated net sales of the company grew by 15 per cent YoY to Rs 2,918 crore and its net profit grew strongly by 27 per cent YoY and 176 per cent QoQ to Rs 412 crore. Cyclically, the onset of the monsoon makes the demand for cement dip because of the slowdown in construction activities but this year the delayed rains along with the low base effect and firm cement prices helped the company to report overall growth in the topline and bottomline during the quarter.
| Financial Performance for the June quarter 2012 | |||||
|---|---|---|---|---|---|
| Particular | Jun '12 | Jun '11 | YoY | Mar '12 | QoQ |
| Net Sales/Income from operations | 2918.98 | 2538.97 | 14.9 | 3015.22 | -3.1 |
| Consumption of Raw Materials | 415.28 | 382.33 | 8.6 | 488.52 | -14.9 |
| Power & Fuel | 608.25 | 572.45 | 6.2 | 680.33 | -10.5 |
| Freight | 586.96 | 485.39 | 20.92544 | 588.05 | -0.18 |
| Exceptional Items | 0 | 0 | 0 | -335.38 | -100 |
| Net Profit/(Loss) For the Period | 412.28 | 325.24 | 26.7 | 149 | 176.0 |
| OPM | 18.46 | 17.65 | 0.81 | 16.73 | 1.73 |
| NPM | 14.0 | 12.8 | 1.2 | 5.0 | 9.0 |
On the operating side too the company has done well despite the rise in the raw material cost of slag, fly ash, gypsum and power (up by 9 per cent YoY) and freight charges (up by 21 per cent YoY). However, there was some relief on the coal side with the prices cooling off a bit on a QoQ basis. ACC’s performance was also strong due to decent sales volume and an increase in realisation during the quarter. The sales volume has grown by 2 per cent to 6.08 million tonnes. However, a major portion of the growth can be attributed to the realisation that has grown by 12.5 per cent on a YoY basis to Rs 4,801.60.
| Sales volume and Realisation | |||||
|---|---|---|---|---|---|
| Particulars | Jun-12 | Jun-11 | YoY | Mar-12 | QoQ |
| Sales | 2,919.0 | 2,539.0 | 15.0 | 3,015.2 | -3.2 |
| Volume (mn tonne) | 6.08 | 5.95 | 2.2 | 6.72 | -9.5 |
| Realisation (Rs/tonne) | 4801.0 | 4267.2 | 12.5 | 4486.9 | 7.0 |
The operating profit grew by 19 per cent YoY to Rs 690 crore and its EBITDA margin too improved by 100 bps to 18.46 per cent as compared to the previous year. Further, the net profit margin too improved by 100 bps to 14 per cent on a YoY basis. Most of the cement companies were able to increase the cement prices during this quarter due to stable demand and the delayed monsoon with prices across the states at an average of Rs 300 per 50 kg bag. In fact, there was even a hike of Rs 5-10 per 50 kg bag in some parts of the country, especially in the western and northern regions where the monsoon has been significantly below normal. This benefitted companies with a pan-India presence.
Going forward we may see a cyclical decline in demand and some contraction in the cement prices too. This will impact the topline and bottomline of the cement companies in the upcoming quarter. The major impact though will be due to the high raw material cost and freight charges that will hurt the margins of these companies.
Meanwhile, the government’s thrust on higher infrastructure spending this year will lead to better demand for the cement companies. ACC Cement, in a post results’ announcement, has stated that barring seasonal fluctuations the momentum may continue to be maintained.
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