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ACC posts surprise net loss in July-September quarter on higher spending

By on October 17, 2022 0

Cement maker ACC announced on Monday a consolidated net loss of Rs 87.35 crore for the July-September period, penalized by higher fuel and electricity expenses. The company had posted a consolidated net profit of Rs 450 crore in the prior year period. Net sales rose 7% to Rs 3,910 crore in the quarter under review from Rs 3,653 crore in the corresponding period a year ago.

The net loss fell short of Bloomberg’s consensus estimate of a net profit of Rs 220 crore for the period. The surprise loss also comes as the Adani Group completes the acquisition of ACC and Ambuja Cements. A Bloomberg consensus estimate had pegged net sales at Rs 4,164 crore for the quarter under review.

On September 16, the Adani group announced that it had completed the acquisition of ACC and Ambuja Cements for 6.4 billion dollars, making it the second Indian cement producer after UltraTech.

On the same day, ACC also terminated its royalty and technical agreement with Holcim Technology, which amounted to 1% of net sales. Data shared by BS Research Bureau shows that the company paid Rs 264 crore in royalties and technical fees in calendar year 2021, its accounting period.

The company will now follow an April-March fiscal year, the ACC said Monday, with the current fiscal year being extended from March 31, 2023 to December 31, 2022. The change in ownership, it said.

Total expenditure jumped 30% to Rs 4,162 crore in the September quarter from Rs 3,204 crore a year ago. Electricity and fuel costs, in particular, rose by 67% to Rs 1,318 crore from Rs 788 crore reported a year ago. Transport costs increased by 14% to Rs 983 crore from Rs 860 crore a year ago.

Earnings before amortization and depreciation of interest taxes (Ebitda) fell to Rs 16 crore in the September quarter from Rs 712 crore reported last year. Ebitda margins, meanwhile, plunged to 0.4% from 19.5% last year. Bloomberg consensus estimated Ebitda was set at Rs 337 crore for the September quarter.

Arafat Saiyed, principal analyst at Mumbai-based brokerage Reliance Securities, said while achievements were decent for ACC in the September quarter, input cost pressures were severe. “Rising input costs remain a major concern for all cement companies in FY23,” he said.

The results showed that ACC’s cement volumes increased 4% in the September quarter compared to the same period last year. Ready-mixed concrete (RMX) saw 10% year-on-year volume growth, he said.

B. Sridhar, full-time Director and CEO of ACC, said, “The RMX business remains a huge growth driver for the future. well and should be in service by March 2023,” he said.

Shares of ACC closed the trade up 1.09% on BSE on Monday at 2,269.70 rupees each. This came as the BSE Sensex closed the trade slightly higher at 0.85% from the previous day’s close. It stood at 58,410.98 at the end of Monday’s session.