ACC Shares Tumble as Q2 Profit Slumps 46%

Sharemasterindia.com: ACC shares fell 3.5 per cent on Monday following the cement maker reported a 46 per cent year-on-year drop in net profit between April to June 2015. ACC was top Nifty loser on Monday.

ACC reported a net profit of Rs 131 crore on sales of Rs 2,961 crore as against net profit of Rs 241 crore on sales of Rs 3,009 crore in the corresponding quarter of last year.

Cement volumes dipped by 2 per cent, while realisation per tonne also declined, hitting bottom line. Pricing in all markets except South India was weak, resulting in lower realisation for the company.

"ACC reported only a marginal 2.4 per cent year-on-year decline in volume whereas realisation fell 8 per cent quarter-on-quarter versus our estimate of only a 3 per cent drop, leading to sharp earnings disappointment," said brokerage Nirmal Bang Securities.

Operating costs rose on account of higher freight costs. Despite falling diesel prices, railways freight rates were higher, which coupled with higher lead distance led to higher freight costs, Nirmal Bang said. Other expenses, such as power and fuel costs, were also higher.

"With domestic coal supply getting expensive, we expect power and fuel costs to rise going forward," Nirmal Bang said.

Other cement makers also declined tracking ACC earnings. Prism Cement traded 4.2 per cent lower, while Ambuja Cements traded 1.6 per cent down. Ultratech traded 1.5 per cent lower.

As of 09.36 a.m., ACC traded 3 per cent lower at Rs 1,442 in a market that was down 0.3 per cent.