ACC Disappoints Its Investors

Associated Cement Company (ACC), a well-known company in the Cement sector has announced its second quarter result today (July 25, 2013).

The company follows the calendar year as its fiscal year. Its topline declined by 3.7% to Rs 2795.23 crore in Q2CY13 as against Rs 2898.74 crore posted during Q2CY12. The bottomline of the company declined by 37% to Rs 261.76 crore on a yearly basis (YoY).Considering the segment-wise revenues, the cement segment revenues declined by 3.3% at Rs 2717.55 crore in Q2CY13 as against Rs 2811.49 crore in Q2CY12. The revenues from the Ready Concrete segment reduced by 2.8% at Rs 164.89 crore on a YoY basis.

The sales volume of the company increased by 1% on a YoY basis to 6.12 million tonnes (MT) as against the 6.05 MT in the corresponding quarter of the last fiscal. Realisations per tonne have declined by 4.67% to Rs 4567.37 in the quarter under review. Overall, the EBITDA margins of the company declined to 15.54% from 21.73% reported in the last year’s corresponding quarter. The EBITDA per tonne also dropped by 32% and stood at Rs 709.57 in Q2CY13.

As per the latest announcement, Holcim (a major investor in Ambuja and ACC) would increase the holdings in Ambuja Cements by 61.39% which in turn will hold 50.01% in ACC. Hence, Holcim would hold an indirect ownership through Ambuja Cements in ACC. The merger would account for numerous benefits for both the companies, right from supply chain and fixed cost optimisation to a more balanced pan-India footprint with 58 million tonnes capacity.

Demand for cement has gone down significantly due to the slowdown in the economy. Rising interest rates and red tapism are major factors behind this. The company is taking significant steps to improve operations, distribution and logistics.