ACC (ACC) Q4 2016 earnings summary

Executive summary

• FY16 was a subdued year for cement demand; lower revenue and cement volumes were offset by cost reductions, leaving standalone PAT higher YoY and operating EBITDA margin broadly stable on a like-for-like basis.

• Jamul and Sindri projects entered commercial production, lifting cement capacity to 33.41 MTPA and strengthening the eastern-region footprint.

Financial highlights

• Standalone revenue from operations was ₹11,158.34 crore, down 5.4% YoY; PAT rose 1.8% to ₹602.40 crore and PBT increased to ₹808.87 crore from ₹783.97 crore.

• Standalone operating EBITDA was ₹1,417 crore versus ₹1,537 crore; margin was 12.96% versus 13.45%. Excluding prior-year sales-tax incentives of ₹139.74 crore, like-for-like operating EBITDA increased.

• Consolidated revenue from operations was ₹11,167.55 crore, down 5.3% YoY; consolidated PAT rose to ₹604.38 crore from ₹587.60 crore.

• Operating costs declined, led by power and fuel costs down 9.9% and materials costs down 8.8%; freight expense fell 2.5%.

• Exceptional charge was ₹42.81 crore in 2016 for investment diminution at ACC Mineral Resources; 2015 included a ₹153.17 crore fixed-asset charge under revised useful-life rules.

Outlook and guidance

• FY17 cement demand was expected to grow ~5%, supported by normalized liquidity and planned public investment in infrastructure, housing and rural development; normal monsoon and stronger government spending were conditions for faster growth.

• Priorities included balancing value and volume, improving capacity use including Jamul, growing premium products, strengthening channels and controlling fuel and raw-material costs amid global price volatility.

• RMX expected to benefit from infrastructure, smart-city, urban renewal, commercial and realty projects; the expanded plant network was positioned to serve these opportunities.