ACC sees 49 per cent drop in quarterly profit

India’s second largest cement producer ACC reported a 49 per cent YoY drop in net profit for the third quarter of the current fiscal.

The company, in which Swiss cement major Holcim owns a 50.3 per cent stake, reported a net profit of INR2.39bn compared with INR4.7bn a year earlier for the October-December 2012 period. The year-ago number included an exceptional gain for a tax write-back of INR1.29bn. Excluding this, profit would have fallen 30 per cent. Higher fuel and transportation costs also impacted the company's bottomline.

ACC sold 24.11Mt of cement during 2012 compared to 23.73Mt in 2011, representing only slim growth which the company attributed to difficult market conditions in the latter part of the year.

On its outlook, ACC said: "We expect demand for cement to improve in the coming year. On the costs front, we anticipate that the prices of our major inputs such as coal, energy, slag, gypsum and freight costs may be under pressure." ACC said preliminary work on the capacity expansions has commenced and orders of major plant and equipment has been placed. These projects are scheduled for completion in phases and would enhance its capacity by 5Mta by 2015. It has around 30Mta capacity at present.

Deutsche Bank downgraded India's ACC Ltd to "hold" from "buy", saying October-December earnings had come below its forecast and noting lower demand and prices for cement are casting doubts about the health of the industry.