ACC's quarterly profit plunges 91% on higher fuel costs and weaker sales

what happened

Adani-owned cement producer ACC said its quarterly net profit fell by almost 91%, according to Reuters and Moody's. The decline was driven by lower sales volumes, higher fuel expenses and a severance charge for staff. A one-time tax gain had lifted earnings a year earlier.

Net profit for the quarter ended September 30 came to 1.01 billion rupees ($10.62 million), down from 11.12 billion rupees a year earlier. Revenue fell 4.7% year on year to 56.12 billion rupees, and cement sales volumes slipped to 9.72 million tons from 10 million tons.

Costs for petcoke, coal and diesel climbed, while weak seasonal demand and tough competition kept companies from passing those increases on to customers. ACC expects demand to pick up after the monsoon season, supported by government capital spending, housing and infrastructure. Rival UltraTech Cement posted a 21.3% rise in quarterly profit last week, though that figure still missed analyst forecasts because of higher costs.

why it matters

For markets, this is a weak report from one of India's large cement producers. Higher energy input costs are squeezing margins across the sector, so ACC's results also serve as a benchmark for its competitors.

market impact

ACC shares and India's cement sector: higher costs are pressuring margins

• ▼ACC shares pressure down — profit slump and higher input costs squeeze margins

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