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ACC disappoints in Q4CY14

ACC, India’s second largest cement maker, posted a rise of 18.31 per cent in its consolidated net profit at Rs 326.22 crores for the quarter ended 31, December against Rs 275.71 crores in the previous corresponding quarter. The company’s consolidated net sales were marginally up at Rs 2,762.31 crore, up 0.75 per cent.

However, the results are not strictly comparable with the previous year given an exceptional gain of Rs 196 crore as credit of tax expenses (tax write back) during the October-December quarter. On adjustment of this, the profitability sharply declines to Rs 130 crore – a fall of nearly 33 per cent.

This is far below the consensus average net profit of Rs 190 crore by six brokerage houses – Kotak, Edelweiss, Prabhudas Lilladher, Emkay, Motilal Oswal and IIFL.

On Tuesday, after hitting an intra-day high of Rs 1,570 (nearly 3 per cent against the previous close), shares of ACC closed in the red at Rs 1,510.6, down 1.02 per cent on the BSE.

The total expenses for ACC during the quarter moved up by about 6 per cent. High costs of materials, fuel & power and rising freight costs dampened ACC’s performance during the quarter. For instance, costs of materials consumed and freight were up 13 per cent and 8 per cent, respectively.

Piyush Jain, analyst with Morningstar India, said, “The company clearly could not keep up pace (in terms of prices) compared with the rise in costs in its operations. Margins took a hit.”

During the quarter, ACC’s two limestone mining operations remained temporarily suspended. In a statement, the company said, “Consequent to an order of the Hon’ble Supreme Court restraining mining under deemed extension of second and subsequent renewals of mining leases, limestone mining operations at Chaibasa and Bargarh plants remained temporarily suspended during Q4, resulting in an exceptional increase in cost.”

ACC is a Holcim group company, with a capacity of 30.1 million tonne per annum (mtpa). It follows the calendar year as its accounting year.

For the year ended 31 December, 2014, ACC’s consolidated net profit stood at Rs 1,161.82 crore, up 6 per cent compared with Rs 1,094.67 crore. The consolidated net sales for the year were up 5.4 per cent at Rs 11,480 crore. The company sold 24.2 million tonnes of cement – a flat growth over 1.1 per cent over the previous year.

The company has recommended a final dividend of Rs 19 per share. This will result in a total outgo of Rs 428 crore.

In its outlook, the company said that based on present indications, it sees a modest but steady revival for the Indian economy in 2015.. “The infrastructure, housing and construction sectors are expected to register faster growth in the near term with a positive impact on demand for cement,” it added.

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