The Hindu Business Line : Higher price realisations help cement firms post profits

Mumbai, Feb. 2 Despite high raw material costs and production remaining flat in the December quarter, topline cement companies such as ACC, Grasim, Ultratech and Ambuja Cements managed to post healthy profits on good price realisations.

While Grasim’s production for the December quarter remained flat at 3.69 million tonnes (3.76 mt), raw material cost has gone up 11 per cent due to increase in fuel and freight rates.

Ultratech, an Aditya Birla group company, reported a 4.8 per cent fall in cement production at 4.3 million tonnes as some of its units shut down for maintenance in October. However, realisation improved 15 per cent to Rs 3,229 per tonne year-on-year.

“Cement realisation growth for UltraTech is higher than other frontline cement companies as it has a high exposure to the southern region, where the price grew about 20 per cent year-on-year,” said Mr Ajit Motwani, analyst, Emkay Research.

Holcim group

Cement production of ACC in the fourth quarter (follows the calendar year) was up a tad at 4.93 mt against 4.91 mt. Production in December fell 4.24 per cent to 1.58 mt (1.65 mt).

ACC despatches in the fourth quarter were up one per cent at 4.91 mt (4.85 mt). In December, despatches were down 6 per cent at 1.57 mt (1.67 mt). The company attributed the fall to shutdown of some of its units for maintenance.

ACC raw material cost in 2007 has gone up 23 per cent to Rs 849 crore (Rs 687 crore), power and fuel charges are up 22 per cent at Rs 1,199 crore (Rs 979 crore) and freight cost rose 16 per cent to Rs 938 crore.

ACC and Ambuja Cement, owned by Holcim, have not disclosed their fourth quarter results.

Ambuja Cement production for the December quarter jumped 5.81 per cent at 4.37 mt and depatches 4.84 per cent at 4.33 mt.

India Cements

A major player in the southern states, India Cements reported a 25 per cent jump in production at 2.2 mt in the December quarter. Higher freight costs (up 55 per cent at Rs 119 crore), power and fuel (up 48 per cent at Rs 176 crore) and raw material (up 10 per cent at Rs 66 crore) impacted its bottomline.

Net realisations went up 25 per cent to Rs 3,382 per tonne and profit rose 59 per cent to Rs 127 crore.