ACC, one of India’s largest cement makers, said it maintains a ‘cautious yet positive’ outlook on the market for the coming months despite the sudden surge of COVID-19 cases in the country.
“The Company believes that the Government is taking all possible steps to intensify the vaccination program and control the spread of Covid. With the government’s increased spending and its strong focus on infrastructure development, we maintain a cautious yet positive outlook for overall cement demand in the coming months,” said the company, which also reported a strong set of numbers for the fourth and final quarter of FY21 today.
STRONG Q4
The company’s fourth quarter net profit zoomed 74% on year when the cost-saving measures adopted in the wake of the COVID-19 combined with a pick-up in demand during Jan-Mar period as the economy continued to accelerate out of the post-lockdown slump.
ACC, whose results are seen as an indicator of the overall condition of the economy, reported a 21.6% jump in the volume of cement sold during the Jan-Mar period to 8 million tons, compared to the same three months of 2020. It said the volume growth was driven by “robust demand and low base impact”.
However, sales of ready mix concrete fell 10.8% to 0.83 million cubic meters, indicating lower demand from certain industrial users.
Nevertheless, the company was able to report a robust revenue increase of 22.7% for the Jan-Mar period to Rs 4,213 cr thanks to a sharp increase in cement price.
The average realized cement price for the company was up 6.5% at Rs 4,876 per ton compared to Rs 4,579 per ton in the same quarter of last year. The company said it was able to increase the average realized price due to the increase in the share of premium products in the overall sales mix.
On the other hand, the cost of raw materials increased by 9.5% to Rs 549 cr, driven by higher cost of slag and flyash. However, the company said its cost optimization program, called Parvat, was able to limit further a greater increase.
The price of power and fuel were up this year, but the company was able to lower the overall expenses on this account by 7.7% to Rs 999 cr. This was achieved by leveraging geocycle for alternate fuels, efficiency improvement in energy consumption and mix optimization, it said.
Freight costs too were down 2.4% at Rs 1,308 cr.
Because of all this, the company’s operating EBIT margin was up 4.5 percentage points at 17% — the highest ever in the company’s history.
“Our cost efficiency project ‘Parvat’ is on track and has helped in managing some continuing cost headwinds,” it said.
On COVID-19, the cmpany said it is facilitating the vaccination of its employees.
“Almost 70% of our eligible employees have been vaccinated. We are ensuring strict adherence to government guidelines across our plants and offices. Adequate infrastructure has been put in place to ensure our employees are safe and get the required medical support,” it added.