Tuesday, February 10, 2009


Sell: 4Q PAT Betters Forecasts on Other Income, Lower Costs

* Derived 4Q PAT rises 5% YoY — ACC's 4Q PAT (derived from reported CY08
results) came in higher-than-expected at Rs3bn vs. our forecast of Rs2.1bn,
largely due to higher other income. 4Q EBITDA fell only 1% YoY due to lower
raw material & other expenses. Adj PAT for CY08 was Rs11.9bn (-8%) and
sales grew 5% to Rs73bn. CY08 volumes grew 5% and realizations fell 1% YoY.

* Volumes pick up, but some pricing pressure in 4Q — Volumes have been
sluggish for ACC until 3Q, but have picked up with ACC reporting a 9% growth
in 4QCY08. Volume growth should continue to be robust in the range of 9-12%
in the coming months. Realizations fell 2% YoY and 4% QoQ in 4Q. The
sequential decline is more than the 1% reported by the other majors.

* Benefiting from lower costs — 4Q profits were better than we expected for two
reasons: 1) Other income was higher due to write back of previous provisions,
insurance settlements and sale of scrap. 2) Costs were lower due to a better
coal mix, some productivity benefits in raw materials and completion of large IT
contracts recorded in other expenses. Most of these cost savings should
continue in the coming quarters.

To see full report: ACC