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ACC: Looking good in 3QFY01

Jan 23, 2001

ACC, India's leading cement company, has posted profit in the third quarter after recording losses in the two earlier quarters. The company has benefited from rising operating margins, which have benefited from greater control over costs and a better pricing environment.

(Rs m) 3QFY00 3QFY01 Change
Sales 6,634 7,480 12.8%
Other Income 87 126 44.2%
Expenditure 6,287 6,652 5.8%
Operating Profit (EBDIT) 346 829 139.2%
Operating Profit Margin (%) 5.2% 11.1%  
Interest 413 447 8.4%
Depreciation 316 361 14.1%
Profit before Tax (295) 146 -149.7%
Other Adjustments 97 -  
Tax - -  
Profit after Tax/(Loss) (198) 146 -174.0%
Net profit margin (%) NM 2.0%  
No. of Shares (eoy) 170.9 170.9  
Diluted Earnings per share#* NM 3.43  
*(annualised)      

During the third quarter, ACC earned operating margins of 11.1%. This is significantly higher than margins recorded last year and in the second quarter of this year (8.6%). The turnaround in the company's performance has been largely due to this surge in margins. Indeed cement sales volume grew a marginal 3% in the quarter.

In our projections made earlier this year, we anticipated ACC to record a loss of Rs 700 m during the current year. The first half results of the company were in line with expectations. However, the recent spurt in cement prices (a large part of which may be explained by the production cuts and cartelisation) has dramatically improved the profitability of cement companies. In view of this we may need to upgrade our numbers (this will depend on whether cement companies are able to hold up prices in the event of the government having called for explanations).

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