Why did ACC report a fall in profits over the last year?

It was an interesting set of numbers by ACC for the Q4 quarter. The profits were sharply lower on a yoy basis, but the profits were higher on a sequential basis. Regarding sales, ACC reported 3.14% growth in sales revenues for the Mar-22 quarter at Rs.4,427 crore. While the cement sales grew 3.04% at Rs.4,102 crore in Q4, the sales of ready mix concrete (RMC) grew 9.96% at Rs.396 crore. Regarding the pending CCI order of Rs.1,146 crore penalty, ACC is confident that the penalty would not stand legal scrutiny.

Let us now turn to the critical operating profits front. Operating profits for Q4 fell by -32% at Rs.488.64 crore due to a sharp spike in the cost of some of the key inputs like limestone, power costs, freight and forwarding costs, fuel costs etc. With competition tightening, the spike in input costs could not be fully passed on to consumers leading to pressure on operating profits. OPM fell from 16.75% in Mar-21 quarter to 11.04% in Mar-22 quarter.

Net profits for the Mar-22 quarter stood -29.55% lower at Rs.396.31 crore as higher input costs hit operating margins. Interestingly, ACC reported higher sequential profits by 41.13% due to Rs.55 crore one-time charge in the Dec-21 quarter towards restructuring costs. PAT margins fell sharply from 13.11% in Mar-21 quarter to 8.95% in Mar-22 quarter. However, the net profit margins were 230 bps higher on a sequential basis, over Dec-21 quarter.