UPDATE 1-India's ACC, Ambuja profits fall on one-time charge

Thu Apr 19, 2012 6:49pm IST

Stocks

   

* ACC Q1 profit falls 57 pct to $29 mln

* Ambuja Q1 profit drops 23 pct to $60 mln

* Both companies hit by one-time depreciation charge

* Expect stable demand, cost pressures continue (Adds Ambuja Cements results)

By Aditi Shah

MUMBAI, April 19 (Reuters) - Indian cement producers ACC Ltd and Ambuja Cements reported a fall in quarterly profit, hit by 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 kickstart construction activity, analysts said, but rising costs will force companies to increase prices to protect margins.

Cement makers are also under pressure ahead of a ruling from the Competition Commission of India (CCI), an anti-trust body, on whether companies have colluded to push prices higher. No names have been mentioned but any such findings, expected later this month, could mean penalties for the companies.

ACC and Ambuja, both 46 percent owned by Switzerland's Holcim, the world's second-largest cement producer, along with rivals Jaiprakash Associates and Ultratech account for around 50 percent of the cement produced in India.

Ambuja, India's No. 3 cement producer, reported a 23 percent fall in net profit to 3.12 billion rupees ($60.32 million) for the first quarter ended March, compared with 4.07 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 2.89 billion rupees.

Net profit would have been 5.07 billion rupees under the earlier method, the company said, which would have exceeded the 4.5 billion rupees expected by analysts, according to Thomson Reuters I/B/E/S. "Continuity in overall current demand would be key to maintain the current momentum," Ambuja said in a statement. "In spite of improved realisation, cost push from higher energy cost and rail freight increase is expected to keep the profit margin under pressure."

Ambuja's net sales rose 19 percent to 26.3 billion rupees backed by a 10 percent rise in volumes and improved prices, the company said.

ACC, India's No. 2 cement producer, reported net profit of 1.52 billion rupees ($29.4 million) for the same period compared with 3.5 billion rupees a year earlier - also impacted by a retrospective change in depreciation method.

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.

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.

Shares in Ambuja, which is valued by the market at $5 billion, closed down 0.9 percent at 164.85 rupees, whereas 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 = 51.72 rupees) (Reporting by Aditi Shah; Editing by Ranjit Gangadharan, Aradhana Aravindan)

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

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

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