India's largest cement maker ACC posts decline in Q1 net profit
India's biggest cement maker ACC Ltd has reported a 1.7 percent decline in net profit in its fiscal first quarter ended March 31, 2008, but managed to beat market forecast which expected a bigger decline.
The Mumbai-based cement maker, 41 percent owned by Swiss cement maker Holcim, said its net profit for the March quarter fell to Rs.357.54 crore ($89.38 million) from Rs.363.75 crore ($90.93 million) for the same period a year earlier, a year-on-year (YoY) decline of 1.7 percent. However, it beat market expectations as analysts had expected it to post net profit of Rs.318 crore ($79.5 million).
During the same fiscal quarter, the company's net sales rose to Rs.1795.75 crore ($448.93 million) from Rs.1674.83 crore ($418.70 million) in the year-ago quarter, a YoY growth of 7.2 percent.
The company has attributed the decline in profit margin to significant rise in raw material prices such as coal, gypsum, power, freight, etc.
"The share of cement in total construction cost has actually declined from around 15 percent a decade ago to 10 percent. The cost of other construction materials have appreciated much more than cement," said N.S. Sekhsaria, chairman, ACC.
While the outlook for demand and supply remains positive, the industry will face increasing challenges of meeting steep cost escalations which exerts pressure on margins, said Sumit Banerjee, managing director, ACC.
The company's Board of Directors has recommended a dividend payout of Rs.20 per equity share for the calendar year 2007.
ACC, which has an annual cement production capacity of 19.9 million tonnes, ahead of its rival Grasim Industries (14.1 million tonnes capacity) and its unit UltraTech Cement (17 million tonnes capacity), plans to increase the capacity to 30.4 million tonnes by 2010 with a total investment outlay of Rs.4000 crore.
ACC manufactures ordinary portland cement, fly ash and slag-based cement for general construction and special applications. It also offers two value-added products, namely bulk cement and ready mix concrete.
1 crore = 10 million
US$ amounts represent convenience translations at US$1= Rs.40
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