ACC consol PAT Apr-Jun drops 60% YoY on sharp operating profit fall

14 Jul 2022

ACC Ltd’s consolidated net profit fell sharply in the quarter ended June on the back of significant rise in operating costs, even as revenues grew in double digits.

The cement company’s net profit fell steeply by 60% on the year to 2.3 bln rupees in Apr-June. It was significantly below analysts’ estimate of 3.4 bln rupees.

ACC’s consolidated net sales rose by 15% to 44.7 bln rupees and was slightly above analysts’ estimate of 43.3 bln rupees.

The company’s strong revenue growth was offset by a 34% rise in operating costs, excluding depreciation and finance costs, to 40.4 bln rupees.

Among the major operating costs, the power and fuel expenses rose sharply by 58% to 13.12 bln rupees. It indicated that the coal and petcoke costs, which make up for bulk of it, saw a substantial increase during the quarter.

The freight costs were up 17% on the year to 10.78 bln rupees.

As a result, the operating profit fell sharply by 50% to 4.3 bln rupees in the June quarter and the operating margin contracted steeply to 9.7% from 22.1% a year ago.

The sharp fall in profitability led to the 60% drop in the company’s net profit for the quarter.

Among ACC’s two main business segments of cement and ready mix concrete, the revenue growth was higher in ready mix concrete but it contributed only 8.6% of total revenues. The cement revenue rose 13% on the year to 41.5 bln rupees while ready mix concrete sales were up by 50% to 3.9 bln rupees.