ACC Q2 results beat estimates; management gives strong business outlook for cement industry
ACC delivers strong results, Management gives strong commentary after Q2 results of the company.
Q2 results of ACC are extremely strong on the operational front. Key reason for strong numbers is due to efficiency and cost reduction. Also, realisations are down 2% (QoQ) vs the estimate of 4% to 6%. Focus on the rural economy and affordable housing segment will generate strong demand for cement business going forward.
Net Sales during the quarter remained flat at Rs 3,468 cr compared to Rs 3,464 cr last year. Operating EBITDA improved by 21% at Rs 671 from Rs 557 cr (YoY) & EBIT improved 26% at Rs 511 cr vs 406 cr (YoY). EBITDA Margins improves to 19.4% vs 16.1% (YoY). Profit after tax improved 20% at Rs 364 cr vs Rs 303 cr (YoY).
Management belives that Indian economy is witnessing early signs of recovery. At ACC, this recovery has been reflected in our Q3 results where our volumes and sales have bounced back to prior year levels. Our efficiency and cost reduction plans have helped drive significant margin expansion during the quarter. ACC continues to manage working capital effectively resulting in healthy cash flow delivery. Management focus continues to remain on ‘Health, Cost and Cash’. Management is confident of ACC delivering a strong performance going forward
Outlook going forward for ACC:
ACC believes that our country’s economic recovery is underway and the economy will bounce back strongly in the next few quarters. The Government's thrust on infrastructure development increased spending through measures aimed at reviving the rural economy and a sharper focus on the affordable housing segment is expected to drive strong resurgence of cement demand and bring growth opportunities for the cement sector going forward.
ACC Delivers Strong Margin Expansion:
Efficiency and Cost reduction drives EBITDA margin expansion by 328 basis points during the quarter 26% growth in EBIT for the quarter vs previous year
Focus on premium products has enabled Net Sales growth of 4% in Cement over previous year
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Cement sales volume increased by 1%
RMX (Ready Mixed Concrete) volumes continue to be under pressure due to slow down in construction activities in metros
Operating cost per ton of cement continues to reduce as we realize benefits of our efficiency and cost reduction programs
Share of blended cement has gone up to 91% during the quarter vs 88% in the same quarter previous year, reiterating our focus on sustainability
(Authored by Rahul Kamdar)
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