Ambuja's Q4 net rises 6.6%, beats Street

The company's managing director steps down to take bigger role in Holcim

Ambuja Cements, part of Swiss cement giant Holcim, has recorded a net profit of Rs 520 crore for the quarter ended March, a rise of 6.6 per cent compared with Rs 488 crore in the corresponding quarter last year. The company follows a January-December accounting year.

It not only beat group company ACC on profits but surprised analysts, who had expected Ambuja’s adjusted profit (excluding one-off items) to remain flat. Bloomberg estimates had pegged Ambuja's first quarter net sales at Rs 2,631 crore, earnings before interest, taxes, depreciation and amortisation (Ebitda) at Rs 530 crore and adjusted net profit at Rs 341 crore. The actual figures were Rs 2,640 crore, Rs 578 crore and Rs 398 crore, respectively. These were also higher than comparable figures of Rs 2,545 crore, Rs 541 crore and Rs 343 crore, respectively, in the year ago period.

The company sold 1.7 per cent more cement during the quarter as sales volume rose to 6.06 million tonnes (mt) from 5.96 mt in the year-ago period. The rest of the increase (totally about two per cent) in net sales came from higher realisation.

Unlike ACC, Ambuja was able to control its costs, up 2.9 per cent, lifting Ebitda margins by 62 basis points year-on-year to 21.9 per cent.

In a statement, the company said, “Though macroeconomic conditions remain challenging, construction activity is expected to pick up pace after the elections. Cement demand is likely to show modest growth.”

On Thursday, the Ambuja Cements stock closed at Rs 218.75 on the BSE, up 1.9 per cent.

MD steps down
Within a year of announcing the controversial Ambuja-Holcim-ACC deal, Onne van der Weijde has stepped down as Ambuja’s managing director (MD), with immediate effect. Deputy MD Ajay Kapur, son of former MD A L Kapur, will replace Weijde.

Sources in the Holcim group told Business Standard, “Weijde has been given more responsibility in the group and is being called back to Switzerland.” They added with Lafarge and Holcim about to merge, Weijde might play a vital role in the process.

Weijde’s role in structuring the Ambuja-Holcim-ACC deal, which took the surplus cash in Ambuja’s balance sheet to Swiss parent Holcim, had attracted widespread criticism from minority shareholders. Many had suggested the surplus cash could have been used to give a bonus to shareholders.

Then, the Ambuja stock had taken a big hit, plunging to Rs 150 on the bourses. However, it jumped back in a few months; currently, it is being traded at an all-time high.