Cement major ACC has reported a 37 per cent dip in net profit in the June quarter at Rs 262 crore, compared to Rs 415 crore in the same quarter last year, due to lower price realisation.
Sales were down four per cent at Rs 2,795 crore (Rs 2,899 crore). The company has declared an interim dividend of Rs 11 per share.
Cement production was up marginally at 6.12 million tonnes (6.05 million tonnes).
Demand for cement during the second quarter was lower than seasonal expectations resulting in weak market conditions, the company said in a statement on Thursday.
Higher operating cost and the company’s inability to pass on the same to consumers led to a 29 per cent drop in earnings before interest, tax, depreciation and amortisation at Rs 490 crore (Rs 690 crore).
The company is implementing a number of initiatives to improve its operational efficiencies and to optimise distribution and logistics to counter adverse market conditions, the statement said.
ACC’s parent, the Holcim Group, unveiled an intra-group restructuring programme on Wednesday to save Rs 600-900 crore in operation expenses per annum.
Total expenses were up four per cent at Rs 2,502 crore (Rs 2,413 crore). However, compared to the March quarter, it was down four per cent, reflecting a softening in power and fuel cost. ACC has set aside 10 per cent (Rs 115 crore) of the penalty levied by the Competition Commission of India in a cartelisation case last year. The amount has been deposited in the form of a bank fixed deposit with lien in favour of the Competition Appellate Tribunal. The Commission had levied a penalty of Rs 1,148 crore.
ACC moved the Tribunal which had ordered the company to deposit 10 per cent of the penalty, pending the final disposal of the appeal. Rajesh Kumar Ravi, Research Analyst, Karvy Stock Broking said the company’s profit was impacted by weak realisation and flat volume growth.
Profitability would remain under pressure on account of timely monsoon impacting demand, he added. Going ahead, cement prices would also be strained due to the high base effect of last year which should ease after the September quarter, he said.
“We expect profitability to improve from the December quarter driven by pre-election demand and improvement in rural spending, due to the positive impact of a good monsoon,” he added.
Shares of the company were down three per cent at Rs 1,194 on Thursday.