ACC Cement Dispatch Grows By 4 Per cent For September 2012
DSIJ Intelligence / 03 Oct 2012
ACC Ltd, a Holcim Group company and the second-largest cement producing company in India, has announced its cement dispatch and production numbers for the month of September 2012.
ACC Ltd, a Holcim Group company and the second-largest cement producing company in India, has announced its cement dispatch and production numbers for the month of September 2012. After reporting a decline in dispatch over the last two months, there has been a recovery in September which is up by 3 per cent on a MoM basis to 1.80 million tonnes while the production is up by 4 per cent on a MoM basis to 1.82 million tonnes. And if we look at the overall dispatch numbers for the September 2012 quarter, there has been a decline by 3.38 per cent on a YoY basis to 5.43 million tonnes.
| Dispatch In Last six Months ( Quantity In Million Tonnes) | ||||
|---|---|---|---|---|
| Months | 2011 | 2012 | YoY | MoM |
| April | 2.05 | 2.07 | 1.0 | -12 |
| May | 1.99 | 2.05 | 3.0 | -1 |
| June | 1.91 | 1.96 | 2.6 | -4 |
| June Qtr 2012 | 5.95 | 6.08 | 2.2 |
|
| September Quarter 2012 | ||||
| July | 2.01 | 1.88 | -6.5 | -4 |
| August | 1.88 | 1.75 | -6.9 | -7 |
| Sept | 1.73 | 1.80 | 4.0 | 3 |
| Sept Quarter 2012 | 5.62 | 5.43 | -3.4 |
|
Cyclically, and in the past the September quarter remains a muted quarter for the cement industry, mainly because of the monsoon when infrastructure and construction activities are at their lowest levels. However, the recovery of demand in September indicates a decent upward movement that may continue in the coming months too. One of the major positives during the September quarter was the lower than expected decline in the cement prices which have continued to surprise with a decline of just 2 per cent in the September quarter - far below our expectations of 5-6 per cent. In fact, according to the latest media reports, some of the cement companies have already hiked the cement prices by Rs 5-6 per bag of 50 kgs. However, this has largely been done to offset the hike in the diesel prices implemented by the government. The hike in cement prices has caused a sentimental rally in the stocks over the last two weeks, pushing them higher by 10-15 per cent.
For the September quarter we expect ACC to post decent financial numbers mainly on the back of the lower than expected decline in the cement prices and recovery in demand in the last month of the quarter. However, one can see some margin pressure too because of the high freight and power & fuel cost. Also, in view of the cyclical business of cement, generally the first half of the financial year remains weak.
However going forward we believe cement companies may see strong recovery of growth in volumes of the cement companies as the pick-up in demand will remain strong this time, especially in the wake of the announcement of various major reforms, including that of increasing the infrastructure spend by the government. Further, with the monsoon reaching its peak levels, one can start expecting a reversal in the cement prices too in the coming months.
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