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ACC: Demonetisation Takes Toll on Volumes - Views on News from Equitymaster
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ACC: Demonetisation Takes Toll on Volumes
Feb 20, 2017

ACC has announced its financial results for the fourth quarter of the calendar year 2016. During the quarter ended December 2016, the company's standalone sales and net profit decreased by 6.2% YoY and 52.9% YoY respectively. Here is our analysis of the results:

Performance summary
  • On a standalone basis, net sales reported a drop of 6.2% YoY during the quarter.
  • Capacity utilisation during the quarter stood at 65%. Cement sales volume stood at 5.45 million tonnes, lower by 9.2% YoY on account of the adverse impact of demonetisation on economic activity in the country.
  • EBITDA margin contracted from 7.6% in 4QCY15 to 7.2% in 4QCY16.
  • Along with poor operating performance, higher depreciation charges and finance costs resulted in 34.5% YoY drop in profit before tax and exceptional items during the quarter.
  • The company booked an exceptional loss of Rs 428.1 million during the quarter, which represents provision diminution in the value of non-current investments in a subsidiary company considering inordinate delay in realising investments made in cancelled coal blocks.
  • As a result, net profit declined by 52.9% YoY during the quarter. Net profit margin contracted from 3.6% in 4QCY15 to 1.8% in 4QCY16.
  • During the calendar year ended December 2016, while net sales dropped by 4.3% YoY, net profit rose marginally by 1.8% YoY.

    Standalone financial performance snapshot
    (Rs m) 4QCY15 4QCY16 Change CY15 CY16 Change
    Net sales 28,461 26,686 -6.2% 114,328 109,364 -4.3%
    Expenditure 26,300 24,771 -5.8% 102,597 97,413 -5.1%
    Operating profit (EBITDA) 2,162 1,915 -11.4% 11,731 11,951 1.9%
    EBITDA margin 7.6% 7.2% 10.3% 10.9%
    Other income 844 795 -5.8% 4,834 3,346 -30.8%
    Depreciation 1,559 1,679 7.7% 6,521 6,052 -7.2%
    Finance cost 154 185 19.8% 673 729 8.2%
    Profit before tax & exceptional items 1,292 847 -34.5% 9,371 8,517 -9.1%
    Exceptional gain/ (loss) 0 -428 -1,532 -428
    Profit before tax 1,292 419 -67.6% 7,840 8,089 3.2%
    Tax 267 -64 NA 1,924 2,065 7.3%
    Effective tax rate 20.6% NA 24.5% 25.5%
    Profit after tax 1,026 483 -52.9% 5,916 6,024 1.8%
    Net profit margin 3.6% 1.8% 5.2% 5.5%
    No of shares (m) 187.8
    Diluted EPS (Rs)* 32.1
    P/E (times) 45.6
    *trailing twelve month earnings
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