Ambuja cement Dispatch Declines By 2.68% In August 2012
DSIJ Intelligence / 04 Sep 2012
Ambuja cement one of the largest cement producing company in India announced the Production and Dispatch numbers for the Month of August 2012.
Ambuja cement one of the largest cement producing company in India announced the Production and Dispatch numbers for the Month of August 2012. The company reported a decline in the dispatches down by 2.68% on YoY basis to 1.45 Mn tonnes. While production declined by 3.9% on YoY basis to 1.46 mn tonne. This Decline is mainly attributable to the falling demand on the back of the revival in the monsoon wherein construction activities are at their lowest levels. Generally July to September month is a lean period for the infrastructure and construction activity.
Looking at the figures given below the Sales volume of the company in the month of July grew by just 0.60% on YoY basis to 1.69 mn tonne which indicates towards the beginning of a slowdown in dispatches. The trend continued in the month of August and we expect this situation to remain in the month of September ahead of raining shower disturbing construction activity.
| Dispatches Figures (In Million Tonnes) | |||
|---|---|---|---|
| Months | 2012 | 2011 | YoY |
| April | 1.85 | 1.82 | 1.65 |
| May | 1.93 | 1.76 | 9.66 |
| Jun | 1.79 | 1.66 | 7.83 |
| Jul | 1.69 | 1.68 | 0.60 |
| August | 1.45 | 1.49 | -2.68 |
Meanwhile Ambuja cement has shown strong performance in the June quarter 2012. The net sales of the company grew by 18% on YoY basis to 2566.93 crore and the net profit jumped significantly by 35% to Rs 468.2 crore. This strong performance was mainly on account of the jump in the sales volume and increase in the realization. Delayed monsoon too helped the company to maintain the dispatches in the month of June.
However as mentioned in our previous update we expect cement companies to report weak numbers for the September quarter 2012. With the arrival of monsoon there will be a natural slackening of demand and companies may report lower dispatch numbers. Further higher Power&Fuel and freight charges will hurt the margins as cement companies this time will not be able to pass on the higher cost due to weak demand scenario.
It must be noted that cement prices have remained firm till now which has helped cement companies to keep the margins intact. However with falling demand one can expect cement prices to correct on an average by Rs 10-15 on 50 KG bag in the coming months. And if prices correct the profitability of the cement companies will take a toll. Lower cement prices with problems of high input cost such as coal, and high freight charges will impact the margins of the cement companies in the September 2012 quarter.
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