 "ACC falls short of street estimates; Q2 net slips 7%")
ACC, promoted by Swiss cement giant Holcim, has fallen short of street expectations during the April-June quarter. Despite having a higher net realisation and better volume growth, the 30 million tonne cement maker was hit by higher costs - mainly the freight expenses.
The consolidated net profit for the company stood at Rs 243.15 crore, a fall of 7.1% against Rs 261.76 crore in the previous corresponding quarter. However, against brokerages' consensus of Rs 280 crore, the profitability was down over 17%.
"The freight costs were higher than what we had estimated," said a Mumbai-based analyst. ACC's freight expenses moved up over 17% year-on-year from Rs 571 crore to Rs 670 crore.
On the BSE, shares of ACC traded weak on Thursday and at one point of time hit an intra-day low of Rs 1,430 before surging and closing in the positive territory with a gain of little less than a percentage point at Rs 1,469. The company declared an interim dividend of Rs 11 a share.
ACC sold 6.35 million tonne of the building commodity against 6.12 million tonne - a rise of 3.75%. This helped the company increase its sales turnover by nearly 8% to Rs 3,009 crore compared with Rs 2,790.4 crore. Interestingly, sales figures were almost in line with industry experts' estimates.
"Manufacturing and distribution costs continued to face escalation, though we derived some benefits from the ongoing cost leadership programme and an increase in the sales of premium products," said ACC in a statement.
More From This Section
It added that demand for cement showed showed some improvement and it expects the positive trend in demand for cement to continue as a result of government's emphasis on housing and infrastructure development.
ACC has been showing sluggish demand growth. And nearly 4% growth in volume during the quarter under review is the highest in last nine quarters for the company. However, the growth is far lesser compared with 14% of Aditya Birla group's UltraTech Cement during the same quarter.
"Demand growth is proving good for the cement players but lower prices and higher expenses are negating the positive impact," said an industry expert.
The capacity utilisation of ACC improved to 85% against 82% in the corresponding quarter a year ago.