ACC, which follows January-December period as its accounting year, has posted 256% jump in its consolidated net profit at Rs 732.35 crore on the back of 11% jump in net sales revenue to Rs 3,895.60 crore for the fourth quarter ended December 2018, as the company recorded a tax credit. ACC received a tax credit of Rs 389.11 crore rupees in the quarter. The Operating Margin (OPM) declined 20 bps to 12.5%. As a result, the operating profit (OP) grew 10% to Rs 487.80 crore. This proportional growth of OP was achieved by executing a set of priorities, both on revenue and cost levers, improving efficiency and strengthening customer and market approach.

The Company's cement sales volumes increased 8.7% to 7.50 million tonnes during the quarter, driven by stronger demand trends and greater focus on premium products, while cement realisation inclined 1.8% to Rs 4,776 per tonne. The company's ready mix concrete business registered significant growth in volumes of 15% during the year through focus on profitable construction segments and value added solutions delivered to large projects. Eighteen new plants set up during the year contributed to the volume growth.

Management Comments

Commenting on the performance, Managing Director & CEO Mr. Neeraj Akhoury said in a statement: ACC has demonstrated its capacity to execute multiple strategies and strengthen the culture of protecting its reputation and driving competitive advantage. ACC has delivered Profit before tax (PBT) growth of 21% for the full year 2018 and 22% for the last quarter of 2018. Over the last Quarter, net sales growth was 11% and operating EBITDA growth was up by 15%. This proportional growth of EBITDA was achieved by executing a set of priorities, both on revenue and cost levers, improving efficiency and strengthening our customer and market approach. This enabled us to improve our performance continuously over the last several quarters. We are excited to continue this growth momentum as we add new cement capacities of 5. 9 million tons through a greenfield integrated cement plant at Ametha in Madhya Pradesh, with a grinding unit in Uttar Pradesh and expansion of our Tikaria and Sindri plants.

Consolidated performance for the December Quarter

For quarter ended December 2018, consolidated total income from operation inclined 11% to Rs 3,895.60 crore, due to jump in cement sales volume across the region and robust growth in premium products and value added products & services and rise in cement realization.

The Company's cement sales volumes increased 8.7% to 7.50 million tonnes during the quarter, driven by stronger demand trends and greater focus on premium products, while cement realisation inclined 1.8% to Rs 4776 per tonne. The company's ready mix concrete business registered significant growth in volumes of 15% during the year through focus on profitable construction segments and value added solutions delivered to large projects. Eighteen new plants set up during the year contributed to the volume growth.

The cement segment revenue, contributing 91% of total revenue, gained 11% to Rs 3,582.18 crore. The ready-mix concrete (RMC) segment revenue, contributing 9% of total revenue, grew 6% to Rs 359.54 crore.

The Operating Margin (OPM) declined 20 bps to 12.5%. Despite rising prices of slag, petcoke and diesel, continued emphasis on productivity measures, improved raw material mix and source mix optimization helped partially offset higher input costs which resulted in improved performance during December quarter. As a result, the operating profit (OP) grew 10% to Rs 487.80 crore.

At segment level, PBIT of cement segment grew 18% to Rs 289.05 crore. The PBIT of RMC segment fell 7% to Rs 35.70 crore. Margins of cement segment increased 50 bps to 8.1% while margin was down by 210 bps to 9.9% for RMC segment.

The other income was down 35% to Rs 30.01 crore. Interest cost fell 31% to Rs 22.35 crore, while depreciation cost dropped 2% to Rs 155.17. Thus, PBT grew by 14% to Rs 340.29 crore.

The company has received net Tax credit of Rs 389.11 crore (the Company has reversed the existing provisions of Rs 500.63 Crore resulting in reduction in Current Tax Liabilities by Rs 200.30 Crore, increase in MAT Credit Entitlement (net) of Rs 34.72 Crore and an increase in Non-Current Tax Assets (Net) by Rs 265.61 Crore). Thus, the PAT before MI and Share of profits from Associate spurted 260% to Rs 729.40 crore. After accounting profit of Rs 2.95 crore in Share of profits from associates, and NIL outflows in Minority interest, the Net Profit zoomed 256% to Rs 732.35 crore.

Consolidated performance for CY18

For the fiscal ended December 2018, consolidated sales inclined 11% to Rs 14,801.62 crore, due to jump in sales volume partly offset by decline in realization. The combined domestic cement sales rose 8.4% to 28.40 MT while realization fell 4.7% to Rs 4,826 per tonne.

The Operating Margin (OPM) fell 60 bps to 13.8%. As a result, the operating profit inclined by 7% at Rs 2,048.12 crore.

The other income grew 11% to Rs 142.66 crore, thus, the PBIDT rose 7% at Rs 2,190.78 crore. With fall in interest outgo by 11% to Rs 87.77 crore and drop in depreciation allowance by 6% to Rs 603.22 crore, PBT, as a result, inclined 15% to Rs 1499.79 crore.

The Company has received tax credit of Rs 10.51 crore, thus, PAT before MI and Share of profits from Associate by rose by 65% to Rs 1,510.30 crore. After accounting gain of Rs 10.32 crore in Share of profits from associates and NIL Minority interest, the Net Profit, as a result, inclined 64% to Rs 1,520.62 crore.

Dividend

The Board of Directors has recommended payment of dividend at Rs 14/- per share of Rs 10/- each aggregating Rs 316.94 crores (including tax on dividend), with a dividend payout of 32%, keeping in view the proposed expansion plans.

Outlook

In the recently announced budget 2019, the Government has indicated its commitment to further augment the infrastructure sector (railways, roads, highways and irrigation projects). Government's concerted efforts to increase investment across several sectors will have a favorable impact which will stimulate cement demand and boost economic growth. This will open up more opportunities and Cement as a core sector wil l continue to benefit from the India growth story.

The scrip closed at Rs 1,388.15 on 05 February 2019 on the BSE.

ACC: Consolidated Results

ACC: Consolidated Segment Results