ACC (ACC) Q4 2010 earnings summary

Executive summary

• 2010 results weakened amid falling cement prices, higher input costs and intense competition; consolidated profit after tax fell to ₹1,077.53 crore from ₹1,563.91 crore YoY.

• Expansion at Wadi and Chanda advanced capacity toward ~30 MTPA, positioning operations for expected demand growth while near-term profitability remained under pressure.

Financial highlights

• Consolidated revenue was ₹8,619.32 crore, down 1.2% YoY; PBT fell to ₹1,415.41 crore from ₹2,247.48 crore and PAT to ₹1,077.53 crore from ₹1,563.91 crore.

• Standalone net sales declined 3.86% to ₹7,717.33 crore; standalone PBT was ₹1,461.45 crore versus ₹2,294.39 crore and PAT ₹1,120.01 crore versus ₹1,606.73 crore.

• Standalone operating EBITDA was ₹1,812 crore versus ₹2,644 crore; operating EBITDA margin fell to 23% from 33%.

• Consolidated operating cash flow was ₹1,950.72 crore versus ₹2,397.08 crore; cash and cash equivalents, including mutual funds, were ₹2,387.59 crore at year-end.

Outlook and guidance

• Cement demand was expected to grow ~10% in 2011, supported by infrastructure spending and rural demand; projected FY2011-12 GDP growth was above 8%.

• Installed capacity was expected to reach ~30 MTPA after Wadi and Chanda expansions and associated grinding units; production, logistics and other enablers were being ramped up.

• ~27 million tonnes of new industry capacity was expected in the next fiscal year, with South Indian supply-demand imbalance a continuing concern.

• Ready-mixed concrete market growth was forecast at ~15% in 2011, with penetration still ~6%; competition was expected to remain strong.