ACC net profit down 30% on cost pressure

Our Bureau | | Updated on: Apr 19, 2022

Due to low demand, the company could not pass on incremental cost to end consumers

Associated Cement Companies (ACC), one of the largest cement companies, reported that its net profit in the March quarter dipped 30 per cent to ₹396 crore against ₹563 crore logged in the same period last year, largely due to lower production and fall in demand.

Net sales were up three per cent at ₹4,322 crore (₹4,213 crore) even as the sales volume dropped to 7.71 million tonne (7.97 mt).

Earning before interest, tax, depreciation and amortisation was down at ₹635 crore (₹860 crore) as the company could not pass on incremental cost to end consumers due to lower demand.

Sridhar Balakrishnan, Managing Director and CEO said the quarterly performance was impacted by the rise in fuel costs driven by the overall geopolitical situation.

The efficiency and cost reduction actions under project ‘Parvat’ remained very strong and helped partially offset the impact, he added. The cost-saving project helped to reduce freight and forwarding cost by one per cent per tonne despite fuel inflation.

The fresh investment in waste heat recovery systems will help mitigate the energy cost inflation, he said.

The company’s project to add 5 mt per annum capacity at Ametha in Madhra Pradesh is expected to be completed ahead of schedule and commissioning of integrated unit is expected by December quarter.

The company commissioned 1.6 mtpa of grinding unit at Tikaria in Uttar Pradesh in February. The waste heat recovery projects at Jamul and Kymore plants are on track and the board has approved next phase of projects at Chanda and Wadi plants to achieve a total capacity of 75 MW, said the company.

Higher input cost will remain a major concern for all cement companies till FY’23 unless fuel and diesel prices cool off meaningfully, said Reliance Securities in a report.

ACC has been working to improve cost efficiencies through various ways will start paying off soon. The commissioning of new capacities and a further improvement in operating parameters by way of setting up WHRS at various plants should aid a sustainable growth, it added.

Published on April 19, 2022
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