As cement prices across regions grew during the January to March quarter, cement majors including ACC, Ambuja Cements and UltraTech Cement benefited from the price rise, reporting a year-on-year growth in realisation during the quarter.
ACC, in which Swiss cement major Holcim holds 50.02% stake, reported a 3% y-o-y and 1% quarter-on-quarter (QoQ) growth in realisation as pricing discipline improved during the quarter and cement majors could pass on part of the cost increase. ACC’s realisation during the quarter stood at R3,893 per tonne compared to R3,767 per tonne in the same period last year. Similarly, Holcim Group?s other Indian unit Ambuja Cement also reported a 4% y-o-y and 10% q-o-q growth in cement realisation to R 3,913 per tonne.
Aditya Birla Group?s UltraTech cement saw its blended realisation (grey cement + clinker + white cement) increase 20% y-o-y and 14% q-o-q as cement prices rose. An IIFL report said, ?Prices rose sharply particularly in South, which accounts for about 25% of UltraTech’s volumes. Cement prices have started declining in most regions in the past one month. Prices in key southern markets continue to be high given the strong pricing discipline at present. However, it would be difficult to sustain.?
Meanwhile, margins of cement players continue to decline on account of rising input cost. Earnings before interest, depreciation, tax and amortisation (Ebidta) margin of ACC during the January to March 2011 quarter declined 650 bps y-o-y to 23.1% as prices of raw material like slag, fly ash and gypsum rose.
?Power and fuel expenses of ACC are expected to rise from the next quarter as Coal India has increased linkage coal prices by 30% from March onwards,? said J Radhakrishnan, an analyst with IIFL in his report.
For Ambuja Cement, Ebidta margins during the quarter declined 360 bps to 27.7% on account of freight cost and rise in fixed cost as cement capacity increased.
And UltraTech reported a decline of 430 bps in Ebidta margins to 22.7% (after combining Samruddhi). Going ahead, experts believe margins are expected to be volatile with downward bias on account of unfavourable demand supply scenario.