India's ACC Q1 profit falls 57 pct on one-time charge

MUMBAI, April 19 Thu Apr 19, 2012 4:21pm IST

Stocks

   

MUMBAI, April 19 (Reuters) - ACC Ltd, India's No. 2 cement maker, reported a 57 percent fall in quarterly profit after a one-time charge, with higher costs of fuel and transportation also squeezing margins even as sales volumes rose.

Demand for cement in India, the world's largest producer after China, is expected to rise 7-8 percent over this year as lower interest rates help construction activity, analysts said, but companies face daunting challenges to raise prices.

The Competition Commission of India, an anti-trust body, is set to rule this month on whether cement companies have colluded to push prices higher. No names have been mentioned but any such findings could mean penalties for the companies.

ACC, 46 percent owned by Switzerland's Holcim, the world's second-largest cement producer, reported net profit of 1.52 billion rupees ($29.4 million) for its first quarter ended March, compared with 3.5 billion rupees a year earlier.

The drop was mainly due to a retrospective change in depreciation on captive power plants which resulted in an additional charge of 3.41 billion rupees.

Net profit would have been 3.8 billion rupees under the earlier method, the company said.

The figure was still well below 4.3 billion rupees expected by analysts, according to T homson Reuters I/B/E/S.

"Margins are lower on a year-on-year basis but given the volume growth and current cement prices we expect profitability to increase," said Rajesh Kumar Ravi, analyst with Karvy Stock Broking in Mumbai.

Rising costs of fuel, raw materials and transport forced manufacturers to increase cement prices by 10 percent over the last year.

ACC said it sold 6.72 million tonnes of cement in the March quarter, up from 6.16 million tonnes in the year-earlier period. Net sales rose 19 percent to 30.15 billion rupees from 25.41 billion.

"Manufacturing costs and realisations were affected by steep escalations in the cost of inputs such as coal, fly ash and gypsum," the company said. "The cost of transportation also rose significantly as a result of the hike in rail freight and increase in diesel prices."

Shares in ACC, which has a market value of $4.7 billion, closed down 3.8 percent at 1,247.60 rupees in a Mumbai market that rose 0.6 percent. ($1 = 51.7250 Indian rupees) (Reporting by Aditi Shah; Editing by Ranjit Gangadharan)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage