Cement major ACC today reported a 45 per cent drop in its consolidated net profit at Rs 133.5 crore for the second quarter ended June 30, on account of challenging market conditions and subdued demand.
The firm, which follows January-December as fiscal year, had posted a net profit of Rs 243.2 crore in the corresponding quarter a year-ago, it said in a regulatory filing.
Total consolidated income fell marginally by 1.5 per cent to Rs 3,015.3 crore in April-June quarter from Rs 3,059.9 crore in the same quarter of 2014 fiscal, it added.
The company attributed the decline in net profit to “challenging” market conditions.
“Overall construction activity remained dull with weak expenditure on infrastructure and housing sectors leading to lacklustre demand for cement. Surplus capacity in the industry heightened competition and made cement prices volatile,” it said.
During the quarter, the company’s cement sales fell by 2.4 per cent to 6.20 million tonnes (MT) from 6.35 MT in the year-ago period.
Ahead of the result, ACC shares today fell by 0.93 per cent to settle at Rs 1,484.10 apiece on BSE.
The firm said its Board of Directors approved an interim dividend of Rs 11 per share compared with an interim dividend of Rs 15 per equity share paid in 2014.
On company’s projects, it said the Jamul clinkering project is scheduled to be commissioned by the end of 2015, while the cement grinding units at Jamul and Sindri are expected to commence in Q1 2016, which is a delay of around one quarter.
On outlook, it said: “We expect demand for cement to pick up gradually over the next couple of quarters, with the governmentu2019s increasing focus on infrastructure development as well as on the promising new projects of Smart Cities and Housing For All.”
It added that interest rates are expected to soften further in the coming months, which may translate to increased participation by retail home buyers. Meanwhile, the company will maintain its thrust on controlling costs and emphasis on market oriented initiatives.
The company said Bernard Fontana has stepped down from its Board of Directors, with effect from July 17, 2015, upon his demitting office as CEO of Holcim, after successful completion of the global merger of Holcim and Lafarge.
“Board of Directors at its meeting held on July 17, 2015 has appointed Eric Olsen a Director of the company. Olsen is the Chief Executive Officer of LafargeHolcim,” it added.
Holcim, the Swiss cement giant holds 50.01 per cent stake in ACC through its Indian arm Holcim (India).