ACC And Ambuja Cement Post Good Numbers For Sept Quarter 2012
DSIJ Intelligence / 22 Oct 2012
ACC and Ambuja Cement, a Holcim Group company, announced its result for the September quarter. As earlier expected, Ambuja Cement has done quite well during the quarter.
ACC and Ambuja Cement, a Holcim Group company, announced its result for the September quarter. As earlier expected, Ambuja Cement has done quite well during the quarter. The net sales of the company grew by 18.6 per cent on a YoY basis to Rs 2,175 crore and the net profit has jumped significantly by 77 per cent to Rs 303 crore. This strong performance was mainly on account of the jump in sales volume and increase in the realization. The sales volume of the company has grown by 1.1 per cent to 4.69 million tonnes while the realization has increased by 17.4 per cent YoY to Rs 4,637 per tonne. The higher realization was on the back of low base effect and firm cement prices during the quarter.
| Ambuja Cement | ||||
|---|---|---|---|---|
| Particulars | Sep ' 12 | Sep ' 11 | YoY | Jun ' 12 |
| Sales (Rs Crore) | 2175.16 | 1833.67 | 18.6 | 2578.45 |
| Sales Volume (Mn Tonne) | 4.69 | 4.64 | 1.1 | 5.57 |
| Realisation (Rs/tonne) | 4637.9 | 3951.9 | 17.4 | 4629.2 |
| EBITDA (Rs crore) | 522 | 304 | 71.7 | 648 |
| EBITDA Margin (%) | 24 | 16.6 | 7.4 | 25.1 |
| EBITDA/Tonne | 1113 | 655.2 | 69.9 | 1163.4 |
ACC, on the other hand, has reported modest topline growth for the quarter. The net sales of the company increased by 10 per cent on a YoY basis while the net profit was up by 48 per cent on a YoY basis. The lower topline was largely on the back of decline in the sales volume which was down by 3 per cent on a YoY basis to 5.43 MTPA. However, a steep jump in the realization up by 13.55 per cent has helped the company to report decent bottomline growth.
| ACC Cement | ||||
|---|---|---|---|---|
| Particulars | Sep ' 12 | Sep ' 11 | YoY | Jun ' 12 |
| Sales (Rs Crore) | 2473.92 | 2248.68 | 10 | 2815.39 |
| Sales Volume (Mn Tonne) | 5.43 | 5.6 | -3 | 6.08 |
| Realisation (Rs/tonne) | 4556 | 4015.5 | 13.5 | 4630.6 |
| EBITDA (Rs crore) | 435 | 220 | 97.7 | 650 |
| EBITDA Margin (%) | 17.6 | 9.8 | 7.8 | 23.1 |
| EBITDA/Tonne | 801.1 | 392.9 | 103.9 | 1069.1 |
The operating costs/tonne of Ambuja Cement increased by 8.9 per cent YoY while that of ACC increased by 9.7 per cent on a YoY basis.
We believe that during the quarter the delayed monsoon has helped the company to maintain its dispatch in the month of June and July. Generally with the onset of monsoon the cement demand cyclically tends to decline. However, with the monsoon arriving late the demand remained firm in these two months. This has helped the cement companies to report much better sales volume as compared to the same period last year.
Moreover, despite an increase in the operating cost, both the companies have posted decent operating performance. This is largely on the back of a steep jump in the realisation during the quarter. The EBITDA margin for Ambuja Cement improved by 740 bps YoY to 24 per cent while that of ACC improved by 780 bps to 17.6 per cent, primarily driven by a steep increase in cement realization. The higher realization was on the back of the firm cement prices which stood near to average at Rs 270-90 per 50 kg bag. This hike was done to set off the higher freight charges and input cost putting pressure on the margins. In a press release ACC’s management has stated that the steep increase in the price of diesel during the quarter led to a rise in the cost of road transport and other inputs.
On the outlook both the companies are positive and have stated that post monsoon they expect the demand for cement to revive and it will help boost despatches in the months ahead.
In conclusion we believe that both the companies have posted decent result though ACC reported lower than expected sales volume. There was some pressure from the input cost side also. However, the firm cement prices and improved operational efficiency helped to improve the margins.
Going forward we believe that the cement companies may see strong recovery of growth in volumes 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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