ACC, an all-India player, has benefited from strong cement price realisations, especially in the southern and western regions during the September 2011 quarter. This has enabled the company to report an 84.6% YoY growth in its consolidated net profit for the third quarter of CY11 (the company follows a calendar year for financial results), and also offset high input costs like coal.
In contrast, the company had reported a fall in its net profit in the first and second quarters of CY11, on a YoY basis due to higher costs. ACC’s total cement capacity amounted to nearly 30 million tonnes at the end of CY10, boosted by additional capacity brought on stream late that year in Maharashtra and Karnataka. The benefit of this new capacity would also be reflected in the company’s results over the next few quarters, say analysts.
Also, with the monsoon season broadly over in most parts of the country (except the southern region), cement prices have started to rise in several regions, on expectations of a revival in construction activity. However, key user industries for cement like the real estate sector are facing a tough operating environment, given that there are no signs of easing in home finance rates.
ACC posted cement sales volume of 21.3Mt during CY10, marginally lower on a YoY basis. The company’s cement division accounted for 93.4% of its CY10 consolidated net sales.
ACC’s consolidated operating profit margin improved 130 basis points YoY to 13.3% in the September 2011 quarter, while net sales grew 31.5% to INR2,382.8 crore. Its cement realisations improved nearly 11% YoY on a per tonne basis YoY, in the quarter, boosted partly by low-base effect of previous year.
During the trailing four-quarters ended September 2011, ACC has shown better performance compared with other leading players. For instance, ACC’s consolidated net sales grew nearly 16.1% YoY during this 12-month period while operating profit declined 7.3%. But in the case of Shree Cement, a leading player in the North, net sales grew 7.8% YoY during this period while operating profit fell 16.1%.