Holcim group companies ACC and Ambuja Cements saw their net profits fall sharply in the three months ended September 30 due to lower demand and an increase in operational costs.
ACC’s consolidated net profit fell by more than half to Rs 119 crore in the quarter, against Rs 242 crore in the corresponding period last year. Net sales were down at Rs 2,509 crore from Rs 2,542 crore in the year-ago period.
The company’s cement production was up marginally at 5.54 million tonnes (mt), compared with 5.4 mt a year earlier.
ACC attributed the lower profit to sluggish market conditions and lower realisation. The company’s price realisation during the quarter was down four per cent at Rs 226 per 50-kg bag against Rs 235 in the September quarter last year.
Overall expenses rose 7 per cent to Rs 2,430 crore against Rs 2,264 crore a year ago.
“The macro environment continued to be dull and was characterised by slow industrial and agriculture growth, rising prices and volatile foreign exchange rates,” ACC noted in a release on Wednesday. There were increases in diesel and coal prices besides the railway freight, it added.
The company intends to counter cost inflation by improving operational efficiency.
Favourable impact
Though the extended monsoon is expected to have a favourable impact on the agriculture sector, ACC foresees a slow improvement in cement demand.
Ambuja Cements’ net profit was down 45 per cent at Rs 166 crore in the September quarter, compared with Rs 304 crore in the last corresponding period. Net sales declined 8 per cent to Rs 2,004 crore in the quarter from Rs 2,164 crore a year ago.
Cement production rose two per cent to 4.89 mt . Sales realisation was down nine per cent at Rs 205 per 50-kg bag against Rs 226 registered in the same period last year.
Total expenses of the company were up five per cent at Rs 1,874 crore.
The share of ACC gained 1.82 per cent to Rs 1,156.95 on Tuesday on BSE, while that of Ambuja Cements rose 0.25 per cent to Rs 196.65