ACC logs surprise net loss of Rs 87.35 crore on high fuel, power costs

Net sales up 7%; royalty agreement with Holcim terminated on Sept 16; paid Rs 264 cr as royalty and technical fees in CY21

Cement maker ACC on Monday reported a consolidated net loss of Rs 87.35 crore for the July-September period, hurt by higher fuel and power expenses. The company had posted a consolidated net profit of Rs 450 crore in the year-ago period. Net sales rose 7 per cent to Rs 3,910 crore in the quarter under review, as against Rs 3,653 crore reported in the corresponding period a year ago.

The net loss was way off the Bloomberg consensus estimate of a net profit of Rs 220 crore for the period. The surprise loss also comes as the Adani group completes the acquisition of ACC and Ambuja Cements. A Bloomberg consensus estimate had pegged net sales at Rs 4,164 crore for the quarter under review.

On September 16, the Adani group announced that it had concluded the acquisition of ACC and Ambuja Cements for $6.4 billion, making it the second-largest cement maker in India after UltraTech. On the same day, ACC also terminated its royalty and technical agreement with Holcim Technology, which stood at one per cent of net sales. BS Research Bureau data shows that the company had paid Rs 264 crore as royalty and technical fees in calendar year 2021, its accounting period.

The firm will now follow an April-March accounting year, ACC said. The company also paid a special incentive of Rs 16 crore to select key employees following the change in ownership, it said.

Total expenses jumped 30 per cent to Rs 4,162 crore in the September quarter, compared to Rs 3,204 crore in the year-ago period. Power and fuel costs, in particular, increased 67 per cent to Rs 1,318 crore versus Rs 788 crore reported in the year-ago period. Freight costs increased 14 per cent to Rs 983 crore versus Rs 860 crore reported a year ago.

Earnings before interest tax depreciation and amortisation dipped to Rs 16 crore in the September quarter versus Rs 712 crore reported last year. Arafat Saiyed, senior analyst at Mumbai-based brokerage Reliance Securities, said, “Higher input costs continue to remain a major concern for all cement companies in FY23.”

Results showed ACC’s cement volumes rising 4 per cent in the September quarter as compared to the same period last year. Ready Mix (RMX) Concrete saw a volume growth of 10 per cent year-on-year, it said.

B. Sridhar, whole-time director & CEO, ACC, said, "The RMX business remains a huge growth engine for future. We have aggressive growth plans and our capacity expansion initiative through our new green field projects at Ametha, Madhya Pradesh is progressing well and is expected to be commissioned by March 2023.”

Shares of ACC closed trade up 1.09 per cent on the BSE on Monday to Rs 2,269.70 apiece.