The cement major jumped 5.25% to Rs 1399.85 after the company reported an increase in operating margin to 20.8% in Q2 June 2020.
ACC's consolidated net profit tumbled 40.5% to Rs 270.95 crore in Q2 June 2020 as against Rs 455.68 in Q2 June 2019. Revenue from operations stood at Rs 2602.24 crore in Q2 June 2020, declining 37% from Rs 4149.82 crore reported in the same period last year. The result was announced after market hours today, 20 July 2020.Operating EBITDA fell 32.95% to Rs 525 crore in Q2 June 2020 over Q2 June 2019. Operating EBITDA margin rose 156 bps to 20.8% in Q2 June 2020 compared with 19.3% in Q2 June 2019. The margin expansion was supported by strong cost management and efficiency actions.
Cement sales volumes were down 34.16% to 4.76 million tonnes in Q2 June 2020 compared with 7.23 million tonnes in Q2 June 2019. The ready-mix concrete sales volume tumbled 82% to 0.15 million cubic metres in Q2 June 2020 from 0.85 million cubic metres in Q2 June 2019. The company said it reported strong recovery in volumes in May and June 2020.
The company witnessed significant volume impact during the second quarter of 2020 as a result of COVID-19 situation and lockdowns. Cement sales volumes declined by 34% during this quarter as compared to the same period of previous year.
As major cities of India continued to be under different phases of lockdown for most of this quarter, the company's ready mix operations experienced a more significant drop in volume. The operational performance of this business continues to remain healthy. The company's cost management and operational efficiency programs have maintained their strong momentum. During the quarter, the company said it focused on supply chain management, contract negotiations, third party spends and fuel efficiencies which helped in partially addressing the impact of lower volumes and improving operating EBITDA margin on a year-on-year basis.
Commenting on company's performance, Sridhar Balakrishnan, Managing Director & CEO said, "The COVID-19 situation and consequential lockdown restrictions adversely impacted our performance for this quarter. The month of April 2020 was almost a total closure impacting revenue & EBITDA for the quarter with strong recovery in May & June. We have resumed most of our operations with strict health and safety protocols. During this period we have significantly leveraged our Master Supply Agreement with Ambuja Cements. With our strong focus on supply chain efficiencies and cost optimization."
In its outlook, ACC said that despite the uncertainty surrounding COVID-19 and lockdown restrictions, the company believes that India will rebound on its growth trajectory.The recent initiatives by the government will help resurgence of rural demand including affordable housing. This coupled with the government impetus on infrastructure will play a strong role in driving cement demand.
ACC is engaged in manufacturing of cement and ready mixed concrete. The company's segments include cement and ready mix concrete.
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