ACC doubles its Q2 net to Rs 182 cr on strong operational show

Strong performance came at a time when country was reeling under monsoon rains, with demand for cement going down and prices remaining subdued

ACC, one of India’s leading cement makers and part of global cement conglomerate LafargeHolcim, surprised the market by posting a strong performance for the quarter ended September 30. The company’s consolidated net profit doubled to Rs 182 crore compared with Rs 90 crore in the corresponding quarter last year.

 
The company’s net sales grew 25 per cent from Rs 2,435 crore to Rs 3,054 crore as it sold 18 per cent more cement at 5.96 million tonnes against 5.07 million tonnes. The top line performance was also ahead of expectations.
 
Bloomberg estimates had pegged ACC's net profit at Rs 163 crore and net sales at Rs 2,890 crore for the September 2017 quarter. On both fronts, the cement maker dwarfed estimates by 5.6 per cent and 10.8 per cent, respectively.
 
Interestingly, such a strong performance — one of its best in several quarters — came at a time when the country was reeling under the monsoon. Typically, during monsoon, demand for cement tends to go down and prices remain subdued. Though cement prices remained weak, higher sales coupled with operating efficiencies helped ACC come up with strong quarterly numbers.  The good set of numbers saw the share price of ACC trade strong on Tuesday and close at Rs 1,792.85, up 0.45 per cent, after hitting an intra-day high of Rs 1,815.20.
 
According to a report by Emkay Global, “Realisation was up 7.4 per cent year-on-year supported by higher sales of premium products and higher sales.”
 
The brokerage has maintained a hold on the stock while upgrading its 2017 and 2018 Ebitda (earnings before interest, taxes, depreciation and amortisation) estimates for ACC by 3.1 per cent and 0.4 per cent, respectively, considering higher sales volume and lower other expenses. ACC follows the January-December financial year.
 
In a statement, ACC Managing Director Neeraj Akhoury said, “This strong result has been achieved through an increased focus on premium products, improved customer service levels and by driving productivity and cost optimisation.”
 
In its outlook, ACC said it expected demand for cement and related products would stay favourable in the coming quarter, spurred by the government’s increased spending on infrastructure, particularly roads, highways and affordable housing. “We are confident about the structural robustness of the cement industry and maintain a positive outlook,” the company said.