ACC net profit doubles to Rs181.5 crore in September quarter
Mumbai: Boosted by a 9.6% rise in revenue to Rs3,116.5 crore and a 341 basis point expansion in earnings before interest, taxes, depreciation and amortization (Ebitda) margin to 13.34%, cement major ACC Ltd on Tuesday reported a 102.3% jump in net profit to Rs181.5 crore in the quarter ended September as compared to the same quarter last year.
Both ACC’s top and bottom lines beat Bloomberg consensus analyst estimates.
One of the primary drivers of the company’s Ebitda margin expansion turned out to be significantly lower other expenses, which contracted 187 basis points to 19.01% from 20.88% of sales or from Rs1,086/tonne to Rs919/tonne.
A basis point is one-hundredth of a percentage point.
The drop in other expenses came even as both power and fuel cost and freight and forwarding expenses shot up from the year-ago period. Power and fuel expenses rose to Rs1,124/tonne from Rs1,051/tonne in the year-ago period. The company attributed this to higher usage of imported and auctioned coal, prompted by the limited availability of linkage coal.
“However, improved raw material mix and fuel mix optimization helped to partly neutralize the adverse cost impact,” chief financial officer Sunil Nayak said.
In terms of volume, ACC said while cement sales rose 17.6% from the year-ago period to 5.96 million tonnes, concrete sales rose 11.3% to 0.69 million tonnes. The company, however, added that overall cement demand remained subdued due to the implementation of the Goods & Services Tax (GST), prolonged monsoon, a sand availability crisis in states like Uttar Pradesh and the rollout of Real Estate Regulatory Authority (RERA).
Nayak said sales volume growth was driven by the stabilization of the company’s plant capacities at Jamul and Sindri during the quarter. On the premium ready-mix concrete (RMX) segment, Nayak said the company has commissioned two new commercial plants at Mumbai and Pune and two dedicated projects in Jharkhand, taking the total number of operational RMX plants to 57. During the quarter, the company’s capacity utilization stood at 73%, compared to 66% in the year-ago period.
“We expect that demand for cement and related products will stay favourable in the coming quarter, spurred by the government’s increased spending on infrastructure, particularly roads, highways and affordable housing,” Nayak said.
A research analyst Ronald Siyoni at brokerage Sharekhan said, “Higher realizations helped in overcoming higher operating cost and with operating leverage kicking in, the company reported strong earnings growth year-on-year.”